Leading industry players such as Munich Re, Gallagher Re, and cyber risk management expert Bitsight have already joined this initiative, with additional partners from the insurance sector expected to follow suit.
The group’s primary focus is to tackle current growth limitations in the cyber insurance market, including the absence of standardization in various market functions and the need to instill confidence and assurance regarding cyber risk among insurance boards, investors, and regulatory bodies.
In an effort to enhance the industry’s understanding of cyber risk and provide the necessary reassurance, Moody’s RMS has pledged to significantly increase its investment in cyber risk analytics. This investment is expected to play a crucial role in unlocking the growth potential of the market by addressing the challenges and uncertainties associated with cyber insurance.
“The participants share a vital interest in growing the cyber insurance market, and together they will advise and steer the group in developing and supporting a long-term strategy that increases risk analytics transparency and advances the industry’s view of cyber risk,” Moody’s RMS said.
Michael Steel, General Manager, Moody’s RMS, commented, “There is a clear need and a significant opportunity to accelerate growth in the global cyber underwriting market. However, there are many legitimate concerns around risk, regulation, and the lack of standardization.
“We are therefore committing to significantly increase our investment in cyber modeling, as we see this effort as central in our role to help develop new markets for the industry’s growth.
“The introduction of Moody’s RMS Cyber Industry Steering Group represents a significant step forward in helping focus these investments and bring together industry-wide efforts to solve challenges and ultimately create a unified currency of risk across underwriting, aggregation, and risk management.”
Dr Jürgen Reinhart, Chief Cyber Underwriter, Munich Re, said, “Cyber insurance is a dynamically developing line of business, projected to grow rapidly in the coming years. It is vital that this growth be underpinned by reliable and widely accepted models, both to foster a sustainable market and to ensure further capacity.
“Initiatives like these play a significant role in improving industry-wide understanding of cyber accumulation risk and underwriting quality, while also strengthening stakeholder confidence. Munich Re is proud to collaborate closely with other insurers and vendors on this initiative as we seek to meet the demands of the growing market.”
Tom Wakefield, Global CEO, Gallagher Re, noted, “Cyber represents both a systemic risk and huge opportunity for our industry. In a market likely to always be capital-constrained due to the sheer scale of future demand for risk transfer, our biggest challenge is attracting enough capital to support clients’ growth in this area.
“Gallagher Re’s dedicated cyber team spends an incredible amount of time educating potential investors and capacity providers, getting them comfortable with the risks, and addressing correlation concerns to bring in that additional capital.
“So, by combining the expertise and insight of leading cyber (re)insurers, brokers, and catastrophe risk modelers in an industry steering group, we’ll produce a powerful mechanism for advancing the wider industry’s view of cyber risk. We are proud to partner with Moody’s RMS on this important initiative.”
Derek Vadala, Chief Risk Officer, Bitsight, added, “Strong partnerships are essential to successfully managing cyber risk because it is a complex, persistent, and asymmetric threat for organizations of all industries and sizes.
“Bitsight is excited to further expand its partnership with Moody’s RMS by joining other leaders in the insurance industry in helping manage this critical, exponential risk.
“As the creator of the cyber security ratings market, Bitsight helps organisations by leveraging its vast set of cyber exposure data and its proven cyber risk models which provide correlation to cybersecurity incidents. We look forward to working together in order to help address this important global issue.”