How can the Reinsurance Industry and Insurance-Linked Securities Funds embrace Cyber Risk Opportunities ?

© Alexandre HASSLER

Contrary to traditional insurable Risks, the complexity of Cyber Risk and the lack of reliable historical Data sources make its financial analysis extremely hazardous and very subjective. While Insurers are facing the difficulty to quantify precisely their financial exposures to Cyber Risk in many different industries, Reinsurers must also assess the probability and the economic impacts of Extreme Cyber Attacks for huge and worldwide Cyber Insurance portfolios. Especially in continental Europe, where Cyber Insurance is still an emerging market, Cyber Losses are very different from Cyber events occuring in the USA or in the UK and then require specific Cyber Risk Modeling approach.

Cyber Reinsurance: an actuarial Challenge but a relevant business Opportunity

Cyber Reinsurance raises some challenging actuarial questions, in terms of Capacity Pricing, Underwriting, Cyber Risk Accumulation Management, Data quality or Exposures identification on a long-term basis. Cyber Risk Securitization and structuring Cyber ILS, Cyber Cat Bonds or Cyber ILW required also particular features which must be also taken into account during the structuration process. That’s why the choice of an Extreme Cyber Risk Modeling technology which addresses efficiently these complex issues and provides prospective Cyber Risk Insights is absolutely critical to foster Cyber Reinsurance Underwriting and Catatrophic Cyber Risk Management.

Why should Reinsurers, Insurance-Linked Securities Funds and Third-Party Capital Providers massively embrace Cyber Reinsurance and Cyber Risk Securitization (through Cyber Catastrophic Bonds or Cyber Risk Industry Loss Warranties for example) ? It is not only a question about accumulating more Premiums or increasing Market shares on a more and more competitive context, especially in a persistent low interest rates environment. On a Business Model perspective, Cyber Risk brings also Reinsurance Industry players a major opportunity to diversify significantly their portfolio and bolster their global book return. While the P&C Reinsurance Market is constantly under pricing pressure and suffers from increasing losses due to Climate Change, Cyber Reinsurance constitutes certainly the most important source of growth and still the most unexploited source of profitability over the last decades for Reinsurers and Insurance-Linked Securities Funds.

Reinsuring Cyber Risk by modeling and monitoring Extreme Cyber Attacks

Bringing together its own Data-driven Cyber Risk probabilistic analytics technology with cutting-edge Actuarial expertise on Cyber Reinsurance, Alternative Risk Transfer, Insurance-Linked Securities and Capital Management, LYON RE helps the Reinsurance Industry to get key insights on economic exposures to Cyber Risks and to mitigate the financial impacts of extreme Cyber Attacks.

Improving constantly its Technologies and its Data collection enables LYON RE to offer Reinsurers and Third-Party Capital Providers exclusively the best Cyber Risk Modeling and Actuarial Analytics with concrete financial metrics and effective positive actions, to ensure Cyber Reinsurance profitability on a long-term basis and anticipate Cyber Risk evolutions on a prospective perspective. Please contact LYON RE to get more use cases in your daily Business.

Cyber Risks & Extreme Risks

LYON RE is an Insurtech Company specialized in Cyber Risk and Extreme Risk Engineering. By leveraging predictive Risk Modeling capabilities and Data-driven exclusive Actuarial expertise, LYON RE helps the Insurance and Reinsurance Industry, Governments and Corporate Institutions to empower their Risk Intelligence strategy.

Specialty Risk Engineering