Approaching dynamic cyber market challenges head-on

The complex and always-evolving cyber (re)insurance market makes it challenging for insurers to accurately assess and price risks, leading to a capital-constrained market. Gallagher Re stands out from other companies because we focus on a model that addresses the two biggest challenges clients and the sector face — capacity and expertise constraints.

It’s our deep expertise of the entire cyber capital chain — from the original product to new capital — that positions us to help clients with all of their cyber (re)insurance needs during a time when capacity is difficult to find.

Our Cyber practice includes teams experienced in traditional and non-traditional cyber solutions:

Traditional solutions

  • Consortiums
  • Facultative
  • MGA
  • Reinsurance (proportional and non-proportional, ILS)
  • Retrocession

Non-traditional/alternative cyber strategies

  • White labelling
  • Special purpose vehicles
  • Captives
  • Syndicates

Re-educating the reinsurance community to raise needed capital

Getting the financial markets to invest in alternative cyber strategies has meant an all-out effort on the part of Gallagher Re to re-educate investors and insurers on what a good risk is and how cyber policies should be written.

The endeavours to increase capacity are paying off; we recently were recognised for the first ILS transaction and catastrophe bond in the cyber market. From the traditional reinsurance product to alternative strategies, our Cyber team understands the entire capital chain and is well placed to help any client with their needs.

We’re also using that expertise to expand capacity markets even further to meet cyber’s growing needs. We are confident that we can access the necessary capital and create the right product — like the cyber Cat bond — to gain access to a much wider investment group.

Dedicated, global team unrivalled in cyber sector

We believe that the ever-changing nature of cyber demands a dedicated team — globally, we have 50 specialists who work solely in the cyber sector.

As a client, you’ll see two different parts of our team. One handles the more traditional, client-centred, purely transactional broking aspect of cyber (re)insurance. The second piece revolves around providing additional consulting services for client risk management strategies.

Because of cyber’s growing and always changing nature, we have dedicated Cyber team members who support consulting services through analytics, modelling and cyber security.

The totality of our experience across the various types of traditional and non-traditional cyber (re)insurance means we have a huge amount of historical claim frequency and severity data that we can leverage to create effective risk management strategies for our clients.

We understand that claim frequency is very volatile, so we track it on a regular basis to lend credibility to our work and give clients confidence.

We regularly use three third-party models — along with making in-house, actuarial adjustments based our claim frequency and severity data — to provide a range of modelling perspectives that best help our clients develop their risk management strategies and guide buying decisions.

The third-party modelling products we license are:

Our Cyber team also can help clients develop their own view of risk irrelevant of the models, enabling them to understand their potential and grow.

Our cyber security team has built a portfolio optimisation tool — Technographic Insight Detection Engine (TIDE) — that helps assess what factors are predictive of cyber losses.

That allows us to take a client’s portfolio and quickly determine what percentage of policies are vulnerable to a variety of cyber attacks.

As a result, we can help you optimise your portfolio, mitigating your risk.

We validate and work closely with multiple outside data providers to navigate through evolving threat landscape. TIDE uses Bitsight scanning signals, but we constantly expand and improve our offering, so we will be looking to add other vendors in the future.

Exposure data provides valuable insights for risk-management strategies

Our Industry Exposure Database covers 80% of the market, providing us with a wide variety of data used to create Industry Loss Curves, which are essential for estimating potential losses and risk assessments. These curves, particularly those derived for a 1-in-200-year return period, serve as benchmarks to understand extreme events and their potential on the market. Clients can use the output for business planning, tolerance assessments and capital-setting frameworks.

Outside of exposures, we also keep a detailed record of all large market losses, development patterns and historical performance, enhancing our ability to provide accurate risk assessments. That broad variety of data and benchmarks also helps us onboard new market entrants, as well as bring new capacity to the market.

Depth and breadth of expertise for all of your Cyber reinsurance needs

You don’t have to do it alone — our dedicated Cyber team staff has the depth of expertise to advise you on what risk mitigation products are available in the marketplace and which ones might work for you.

If your traditional placement isn’t going the way you thought it would, or your current broker doesn’t have the expertise you need, we invite you to check out our solutions and strategic advisory offering. We can compare wordings and benchmark them, model your portfolio to quantify systemic risk and derive a Probable Maximum Loss (PML) methodology suitable for your business strategy. In addition, our track record of creating and delivering new cyber products — like the first cyber Cat bond — also demonstrates our dedication to expanding market access.

The cyber reinsurance market most certainly will remain in flux, delivering challenges that continually evolve. Count on Gallagher Re to be the pillar that never changes in your cyber world. Let us help you face your future with confidence.