On the Ground in Monte Carlo: Bringing More Than Capacity to the Reinsurance Market
Thousands of professionals in insurance and reinsurance met at the Rendez-Vous de Septembre (RVS) conference in Monte Carlo last month to discuss the state of the market ahead of renewals.
Specialty lines of insurance, like cyber, can often take a backseat at RVS. However, recent headline-grabbing events, like CrowdStrike’s IT outage and the Change Healthcare ransomware incident, necessitated conversations about what systemic risk means for the future of the cyber market.
Shawn Ram, Coalition’s Head of Insurance, was in attendance at RVS. And, with a new spotlight shining on cyber, he helped us introduce Coalition Re, our standalone reinsurance intermediary.
No one can tackle cyber risk in the dark
When cyber events lead to real-world consequences, like delays in claims processing or grounded flights, it paints a vivid picture of a deeply interconnected world entrenched in digital risk.
To address these third-party disruptions, carriers need a comprehensive view of the cyber risk landscape. That’s why we’re providing reinsurance capacity with visibility.
There’s often a breakdown of information in the reinsurance world, ultimately leading to mispriced reinsurance contracts and an inaccurate understanding of exposures. As aggregation presents itself as a long-term concern, we’re sharing our cyber expertise and vast data-driven insights to give carriers a better understanding of their policyholders — and deeper insights into the overall digital risk within their portfolios.
To illustrate how reinsurance can better equip carriers for cyber risk, Shawn Ram discussed Coalition Re with AM Best’s Richard Banks during the conference. We’ve lightly edited highlights of that conversation below:
What have events like CDK and Change Healthcare taught us about the cyber market?
One event that causes many clients to have claims adds to concerns about systemic risk in cyber — and this year, we saw several of these events. This has led to a need for increased capacity in the industry, specifically around non-proportional coverages. We’re grateful to be a new provider in that space.
How have attitudes toward cyber insurance changed?
We believe that cyber is the most pervasive risk in society today. More and more companies are utilizing technology to increase their efficiency, profitability, and growth. As the use of technology increases around the world, digital risks increase as well. Things we’ve seen over the past few years, such as the epidemic around ransomware, concerns about security, and the fallout of the COVID-19 pandemic, have strengthened the desire to protect against digital risk for many companies.
Is cyber a short-tail risk or a long-tail risk?
In some lines of business, long-tail risks can ensue over a couple of decades. Comparatively, cyber is short-tail. Most claims are solved in a short period of time. A ransomware event is something where an adversary requests payment relatively quickly (days or weeks), and funds transfer fraud events are solved quickly.
Cyber has a medium-tail risk when you deal with a data breach, especially when it leads to class action lawsuits. The litigation around those can be longer.
How well prepared is reinsurance to take on aggregate risk?
I think understanding systemic risk in cyber has been challenging. There are a lot of nuances around how to calculate what the aggregate exposure is within a portfolio. There’s now some maturity in the cyber marketplace, but I think there’s an opportunity to provide more data and more services around reinsurance.
Coalition’s mantra on the retail side is to be an Active Insurance partner. I think there’s an opportunity to be more active in the reinsurance space and provide services to cedents where they can better understand their exposure, have more clarity on the maximum probable loss from a single event, and have data to help them manage their exposure on an individual underwriting basis. I think that's a tremendous opportunity.
Watch the full video interview with Shawn here
