Aon Benfield has announced that it has sourced the reinsurance capacity for a unique cyber product developed by the Lloyd’s syndicate of mutual energy insurer AEGIS London.
The product offers a comprehensive cyber risk management service, and allows AEGIS’ policyholders to separately reinsure their cyber exposures with a panel of leading reinsurers. Traditionally, cyber exposures have been included within other lines of reinsurance cover, such as property and casualty, but the level and scope of coverage can often be difficult to ascertain.
The AEGIS London facility goes beyond the traditional basic cyber offering – which has generally provided lower coverage limits and has focused on losses arising from information security breaches which led to data loss.
Instead, the facility provides holistic cover against cyber losses, focusing both on operational and information technology breaches – which can lead to more expensive and wide ranging claims arising from bodily injury, contingent business interruption, and physical damage to high value assets. This advanced approach is needed to deal with emerging cyber threats and exposures, particularly in critical infrastructure industries such as manufacturing, marine and aviation.
Rick Welsh, Head of Cyber Insurance at AEGIS London, said: “In traditional property and liability reinsurance policies it can sometimes be very unclear whether cyber is covered, and this can lead to gaps in coverage and potential exposures for insurers. On the other hand, where cyber is covered there is the potential for much larger claims than reinsurers had anticipated, especially in relation to property damage. Our aim with this cyber product is both to highlight the potential for cyber losses in the market, and to provide a comprehensive, standalone coverage for those exposures. This allows insurers and reinsurers to better evaluate their cyber risks.”
The AEGIS London product includes a range of services such as risk and maturity assessments to help its policyholders reduce the likelihood of cyber losses. It also provides access to incident response teams should a cyber breach occur.
Tom Wakefield and Jerry Blake, cyber experts and members of Aon Benfield’s Global ReSpecialty Composite team, commented: “Working with AEGIS London we have bridged a gap in the cyber sector by sourcing the high quality reinsurance capacity required to bring this product to market. Our Composite team takes a holistic approach to client challenges to enable them efficiently manage and mitigate risk through multiclass reinsurance solutions.”
The cyber product has resulted from detailed analyses performed by AEGIS London’s experts in the cyber field. Over the past three years, AEGIS London has carried out extensive research and data collation for cyber risk in critical infrastructure industry, particularly in energy, in order to evaluate industry exposures. AEGIS London recently hired two cyber security specialists to support the product.
Mr. Welsh added: “We decided to take a broad approach to cyber risk, beyond the traditional focus of IT and data breaches, to encompass the full technology estate. Based on our experience in the cyber field, our experts are able to view the underlying security posture and better understand the probability of a loss. With the growing emphasis placed on computer-driven operational technology, cyber losses are becoming increasingly prevalent and insurers and reinsurers need to be aware of their potential exposures.”
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