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December 20, 2018

Earlier this fall in Monte Carlo, insurance, reinsurance and insurance-linked securities (ILS) market executives met for the third Reinsurance Rendezvous Roundtable. The goal was to discuss the capital market’s response to the 2017 and 2018 natural catastrophe seasons as well as possibilities for growth and expansion in 2019. Given that ILS, as of now, is focused heavily on peak perils, participants agreed that there was opportunity for growth into other mature and emerging markets, including cyber and the introduction of parametric products.

The emerging market that most interested participants was without a doubt the cyber insurance market. According to Joanna Syroka of Fermat Capital, it was clear that the cyber market’s growth and its ability to touch many aspects of many industries put it alongside other peak perils like natural catastrophe.

Richard Lowther of Hiscox Re cautioned, however, that issues with the capitalization of the cyber insurance market remain. Unlike natural catastrophe, Lowther explained, cyber does not have much access to independent modeling techniques based on physical and measurable phenomena.

Most, if not all, participants agreed that the cyber insurance market—especially if carriers begin to offer parametric cyber insurance products—offers a huge opportunity for the ILS market.