NEW YORK — Having the federal government help out in the event of a cyber-related disaster is a good idea, but only if it’s limited to acting as a backstop in a situation that threatens the survival of the insurance industry, speakers at the Professional Liability Underwriting Society’s cyber symposium said Tuesday .
“We’re the ones with the expertise, not the ones working for the government,” said Jeremy Gittler, New York-based head of cyber and technology Americas at Axa XL, speaking during a session on the cyber market’s capacity constraints.
“We don’t want a situation where they say … you can only use so much capacity, you have to get so much reinsurance,”; he said. “None of us want that.”
“But if it’s a real backstop that — after whatever number you want to pick — the government will come in and pick up the rest of it so the insurance industry can survive … that’s a wonderful thing.”
Gittler spoke during one of several wide-ranging sessions on cyber issues.
During a session on the state of the cyber market, Courtney Maugé, Atlanta-based senior vice president and cyber practice leader for NFP Corp., said cyber pricing is “where it needs to be to stay profitable. But we’re all a little hesitant” because of ransomware.
“We know we haven’t seen it as much from a frequency perspective, but we know the severity can still be there,” she said.
Maugé questioned whether this calm is because “they’re busy in Russia or Ukraine, and “it’s going to come back really hard.”
Additional capacity coming into the market from traditional insurers as well as managing general agencies and insurers “will probably have an effect on the rate,” said Josh Ladeau, CEO of Hartford, Connecticut-based Trium Cyber US Services, Inc. But he said the impact of the additional capital may be limited because the various players “are not all competing in the same space.”
Panelists grappled with the issue of addressing war risks in cyber policy during a session on war, widespread events and systemic risks.
“Let’s just recognize that there could be a cyber attack that results in an impact that would be similar to a war event. And how you define that goes a long way and requires a lot of thought about how you deal with that,” said Robert Wice, underwriter, major risk errors and omissions, for the Beazley Group in Farmington, Connecticut.
“But for the sustainability of this marketplace, to make sure we contain all kinds of volatility as best we can,” it’s important to get all stakeholders involved, he said.
During a session on reinsurance, Simon Welton, vice president of London-based cyber insurer Envelop Risk, said, “If there’s one improvement that I see,” it’s “that this industry feels much more collaborative across the entire value chain.”
There’s “a dialogue and there’s a willingness to share what we know,” which is “really important because we’re all learning something new,” he said.