September 2, 2014 by Canadian Underwriter
Aon Benfield has sourced the reinsurance capacity for a cyber product that offers a comprehensive cyber risk management service – focusing on both operational and information technology breaches – and allows AEGIS’ policyholders to separately reinsure their cyber exposures with a panel of leading reinsurers.
Developed by the Lloyd’s syndicate of mutual energy insurer AEGIS London, the product differs from the traditional basic cyber offering by providing holistic, standalone cover against cyber losses, notes a statement issued Friday by Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc.
Aon Benfield reports the AEGIS London product focuses both on operational and information technology breaches, which can lead to more expensive and wide-ranging claims arising from bodily injury, contingent business interruption and physical damage to high-value assets. The approach is needed to deal with emerging cyber threats and exposures, particularly in critical infrastructure industries such as manufacturing, marine and aviation, the company comments.
The traditional basic cyber offering has generally provided lower coverage limits, and focused on losses arising from information security breaches that led to data loss, the press release states. Also traditionally, cyber exposures have been included within other lines of reinsurance cover, such as property and casualty, but the level and scope of coverage can often be difficult to ascertain, it adds.
“In traditional property and liability reinsurance policies, it can sometimes be very unclear whether cyber is covered, and this can lead to gaps in coverage and potential exposures for insurers,” Rick Welsh, head of cyber insurance at AEGIS London, says in the statement. “On the other hand, where cyber is covered there is the potential for much larger claims than reinsurers had anticipated, especially in relation to property damage,” Welsh continues.
By highlighting potential cyber-related losses, insurers and reinsurers can better evaluate their cyber risks, he points out.
“Working with AEGIS London, we have bridged a gap in the cyber sector by sourcing the high-quality reinsurance capacity required to bring this product to market,” Tom Wakefield and Jerry Blake, cyber experts and members of Aon Benfield’s Global ReSpecialty Composite team, comment in the press release. “Our Composite team takes a holistic approach to client challenges to enable them to efficiently manage and mitigate risk through multi-class reinsurance solutions,” Wakefield and Blake add.
The cyber offering is the product of extensive research and data collation by AEGIS London over the past three years for cyber risk in critical infrastructure industry, particularly in energy. The product’s range of services include risk and maturity assessments to help its policyholders reduce the likelihood of cyber losses, and access to incident response teams should a cyber breach occur.
“With the growing emphasis placed on computer-driven operational technology, cyber losses are becoming increasingly prevalent and insurers and reinsurers need to be aware of their potential exposures,” Welsh emphasizes.