The cyber moment in the spotlight of reinsurance in Baden-Baden

It’s when there is relative stability in the property and casualty reinsurance landscape that the specialty gets its well-deserved moment in the sun. And with weather likely to dominate P&C conversations at the 2024 Baden-Baden Reinsurance Congress, growth opportunities are hot, noted Chris Baddeley (pictured left), vice president of insurance solutions at Envelop Risk, and cybersecurity is very much a part of this conversation.

Understanding the rapid growth of the cyber reinsurance market

He noted that as a specialist cyber reinsurance underwriting company, serving the market since 2018, Envelop enjoyed insight into the changing nature of cyber reinsurance conversations. He pointed out that when Envelop first visited Baden-Baden three years ago, cybersecurity was an “alternative” topic of conversation at meetings – for some, a welcome break from property discussions and accidents. Today, with a schedule of back-to-back meetings with risk carriers looking to get into cyber for the first time, or with established players looking to expand their existing portfolio or geographic footprint, cyber is now at the center of attention.

Despite the rapid growth of cyber risk and the cyber reinsurance market in general, the last two years have been relatively quiet, with pockets of the market where growth has been markedly moderate, he said. The theme of the 1/1 renewal conversations that Envelop is starting to have, and which will take place in Baden-Baden, is that growth is firmly back on the agenda, but in a much more focused way than previously.

“So rather than resorting to a catch-all phrase of ‘cyberspace growth,’ the market is taking a much more nuanced and focused approach,” he said. “Many operators are looking at geographies, customer segments, distribution models and other specific niches within the market for this growth potential. And it’s in a way that we, as a team, don’t feel like we’ve seen before. Whether it’s European growth, Asia, mid-market or alternative retail, these are some of the themes that we believe are emerging as focal points.

Open chat

It is conferences such as the Baden-Baden meeting that are helping to open up discussions about Europe and other regions as a market, he said, and how actors in the re/ insurance can help it reach its full potential, given the limited global penetration rate of cybersecurity. remains. “However, I think that while new opportunities will be a key theme of conversation,” he said, “it’s also important that people don’t forget what’s happening in their existing portfolios. And this year has been a good reminder of that.

“Because while this is an exciting business and there are huge opportunities in emerging markets and other parts of the ecosystem, losses can still occur. Large losses can occur and feline events in one form or another can occur. We want to make sure people don’t lose sight of their core portfolio exposures as they embark on these new growth journeys within their business.

What’s the news in Baden-Baden in 2024?

Simon Welton (pictured right), senior vice president of Envelop Risk, affirmed Baddeley’s belief that looking to the future while ensuring the house is in order will be one of the company’s priorities. agenda in Baden-Baden this year. Another element of the evolution of cybersecurity that fascinates him, he says, is how it has grown from zero to a mature industry in such a short time.

There are many parallels between the growth of cyberspace and the property and casualty insurance market, and even other specialty lines, including terrorism, he said. But the fact that it has gone from non-existent to what it is today in terms of the development of modeling techniques, and now ILS and other financial instruments, has been extraordinary. “And the journey between the two, which has followed the fairly traditional path of quota sharing being the best way to get there, then excess loss, then excess loss, has just been super accelerated .

“It’s probably because, as an industry, we learned lessons from many other industries, but you still have to consider that we weren’t really able to look back when cyber is developed for the first time. You can go back thousands of years of earthquake history, hundreds of years of hurricane history, and even in liability, you can go back many years of litigation records. This did not exist for cyberspace and so we have built a large ecosystem around this dynamic threat in a short time, which is extremely positive.”