Worldwide cyber insurance premiums will grow from $4bn today to $9bn by 2020 and $20bn by 2025, Munich Re has predicted.
However, CUO Stefan Golling said the carrier did not believe any insurer should underwrite the risk of a cyber attack taking out major infrastructure such as power networks, as the market did not have the necessary capacity.
Torsten Jeworrek, chairman of Munich Re’s reinsurance committee, added that risks that could accumulate large losses across the industry were not insurable.
Nonetheless, Jeworrek, speaking at a press conference at the Monte Carlo Rendez-Vous, insisted that the market could provide adequate coverage for a great deal of less correlated cyber risk, despite not all significant players writing cyber as a specific class.
“When you have something new, do you seriously expect everyone to jump on at the same time?” he said.
He added that most significant players were on board although many were holding back on writing cyber until they could analyse the experience of earlier adopters.
Golling highlighted Munich Re’s push into cyber over the past five years from writing just over $100mn in gross written premiums (GWP) in 2013 to $400mn in 2018.
Jeworrek added that the risk was linked to the growing number of connected devices in use, which is expected to increase four-fold to reach 125bn in 2030.
Golling said Munich Re would continue to focus on cyber cover for small businesses, because although larger companies suffered nominally higher losses, their better preparedness meant those losses impacted them proportionately less.
Therefore, he said, the insurance cover for smaller businesses was more valuable.
Smaller businesses also presented Munich Re with the opportunity to offer clients a bundle of services such as cyber security consulting and post-loss assistance.
He noted Munich Re had established cyber teams in the US, Europe and Asia and hired more than 20 cyber experts from outside the reinsurance industry to help bolster its cyber offering.
Golling said that insurers must ensure their policy wordings were clear enough to exclude war risks, in case of a “mega-risk” terror-related cyber-attack that could be construed as an act of war.
Cyber strategy aside, Jeworrek said Munich Re had seen a strong trend of cedants increasing their non-catastrophe treaty covers in order to “execute capital management policies”.
He added that increasingly, quota-share business that cedants bought to bring down their required capital was placed with between one and three reinsurers rather than more carriers.
Jeworrek also reaffirmed Munich Re’s commitment to supporting climate change initiatives, following its August announcement that it would no longer cover risks linked to coal.
He said “supporting policies and business models” to protect against climate change was “in our genes”.
Jeworrek added that the carrier did not want to undermine “political decisions” on climate change such as the 2015 Paris Agreement, which commits signatory states to planning and reporting their actions on mitigating global warning.