cyber risks, where we are - scor · 2017. 10. 30. · evolution of the cyber (re)insurance market...
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Cyber risks, where we are
Sébastien Héon, Deputy Chief Underwriting Officer, SCOR Global P&C
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AGENDA
Evolution of Cyber Risks
Evolution of the Cyber (Re)insurance market
Understanding Cyber Risks
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2
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Cyber risks: What we said in 2016
Denis Kessler
(quoting the WEF Global Risk Report)
Victor Peignet
Didier Parsoire / Sébastien Heon
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Recent Cyber attacks evidenced disruptive potential - Data Breaches remain significant
SCOPE− Cyber is not only Data Breach / Privacy
liability− Manufacturing / industrial accounts are also
impacted, worldwide− Geopolitical tensions are a risk driver− Accumulation
SEVERITY− Some companies impacted by Petya issued
profit warnings− Several companies released Petya impact on
earnings in the range of $100m - $300m
Key take-aways
Dyn
Major Data Breaches
Disruptive Cyber Attacks
Petya
Sept. 2016 Sept. 2017
DeloitteEquifax
WannaCry
Securities & Exchange
Commission (SEC)
Yahoo! Dailymotion
Adult Friend
Finder
Yahoo!
Source: Financial Times – 7 July 2017
5
1Bn
412m
500m 85m143m TBA
TBA
Nb of
records
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AGENDA
Evolution of Cyber Risks
Evolution of the Cyber (Re)insurance market
Understanding Cyber Risks
1
2
3
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The (re)insurance market: What we said in 2016
Cyber Exclusion write-back / Cyber Endorsement
Cyber Standalone Policy
Cyber + E&O Bundled Policy
Comprehensive Cyber Package
A Great Diversity of Cyber cover purchase:
c. $3bn
c. $9bn
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Insurance capacity remains overall stable – carriers more cautious in allocating capacity
Some large programs (ca. $600m) have been placed in the US
Take-up rate increases and expands now to manufacturers & utilities
However, the SME market remains challenging
Cyber insurance premium – depending on how you count! - reach $1.35 billion in 2016, +35% from 2015 - source: Fitch Ratings and A.M.
Best
A vast majority of reinsurance treaties remains QS
Stability of insurance capacity & reinsurance structure – Market growth as expected
The (re)insurance market: What we see in 2017
Risk Managers adopt a large variety of response to cyber exposure: exclusion write-back; cyber extension to standard
policies; Cyber standalone, comprehensive Cyber product (encompassing 1st/3rd party cover for tangible risks)
Some companies buy several of these solutions resulting in overlaps
Wordings show unpreparedness / lack of maturity in front of reality of Cyber perils : Cyber extensions “Frankenstein-ed” in
Property contracts which creates … strange creatures (e.g. misalignments in definitions)
Reinsurers face the challenge of identiying exposures in various treaties
Unclear purchase pattern results in cyber exposure scattered in different insurance policies
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AGENDA
Evolution of Cyber Risks
Evolution of the Cyber (Re)insurance market
Understanding Cyber Risks
1
2
3
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Understanding cyber risks: What we said in 2016
Structuring cyber insurance products and developing tools are challenges
requiring cyber knowledge and out-of-the-box innovation
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Understanding cyber risks: An example of what we have done
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Understanding cyber risks: An example of what we have done
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As a Lead reinsurer, we contribute to the improvement of the whole Cyber Chain to collectively build a sustainable Cyber (Re)insurance Market
• Exposure analysis & scenarios
• Risk reduction & transfer strategy• Matching demand and offer in a
competitive environment
• Risk selection
• Streamlining wordings & programs
• Pricing
• Aggregation modeling &
control
• Development of proper
reinsurance offer
• Pricing
Insureds Insurers Reinsurers
Addressing challenges at each step of cyber risk management and risk transfer
Brokers