Re-framing Cyber Risk: Howden Re advocates for increased market engagement

In an industry-first report, Re-framing cyber risk: navigating threats and embracing opportunities, Howden Re details the untapped potential and required recalibration in the cyber (re)insurance market, with data indicating that the industry could, and should, bear more cyber risk than it currently does.

Howden Re’s analysis suggests that larger carriers assume disproportionately little cyber risk when compared with nat-cat, even though nat-cat historically produces more significant losses relative to written premiums.

While perceptions of heightened systemic risk within the cyber class have been persistent, contributing to insurer caution, the reality is that such events face considerable execution challenges, making them less common. Instead, rather than cyber cats the industry more frequently contends with “cyber-kittens” – incidents that, while disruptive, have more contained and manageable impacts.

The report calls for a more nuanced approach to cyber exposure management, advocating the use of available advanced risk assessment and modelling methodologies to balance opportunities with an informed view of vulnerabilities.

As the market landscape evolves, a shift towards a more balanced and informed underwriting strategy could redefine the industry’s role in shaping the future of cyber resilience and security.

Luke Foord-Kelcey, Global Head of Cyber, Howden Re, commented on the report’s insights: “Cyber risks consistently top the rankings of risk managers’ concerns. To stay relevant to those buyers of insurance, as an industry it is imperative that we embrace this class of business. This report identifies how carriers may assess their appetite for the cyber class of business to ensure they recognise the extent of the opportunities within the context of a more thorough understanding of the risks.”

David Flandro, Head of Industry Analysis and Strategic Advisory, Howden Re, said: “The maturing of the cyber market necessitates a thoughtful recalibration of how cyber risks are underwritten. A transition is necessary: from viewing cyber threats through a catastrophic lens, and instead recognising the competitive advantage that can be gained through more nuanced and informed risk analysis.”

Foord-Kelcey added: “Investing in cyber-specific expertise and leveraging refined risk models are key to navigating the complexities of cyber threats effectively. This approach will not only transform perceived vulnerabilities into competitive advantages, but also enable our clients to capitalise fully on the burgeoning opportunities in today’s digital landscape.”