A.M. Best Comments on Standards-Based Assessment of Cyber Exposures as Detailed in Lloyd’s-Cyence Report

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has commented that a recent joint report by Lloyd’s and Cyence that aims to provide cyber insurance providers with plausible and realistic scenarios to evaluate their cyber risk accumulations represents a positive step forward in developing consistency in the measurement of cyber exposure.

In its Best’s Special Report, “A.M. Best Comments on Lloyd's–Cyence Cyber Catastrophe Report,” A.M. Best states that the Lloyd’s-Cyence report is timely as the development of tools that support insurers’ ability to understand and manage the aggregation of cyber risk across their portfolios is vital. A.M. Best expects companies underwriting cyber insurance to provide detailed and credible assessments of potential loss accumulations as the materiality of the companies’ exposures relative to capital grows.

In the joint report, Lloyd’s, one of the largest writers of cyber insurance, and Cyence, a cyber-risk analytics firm, brought together expertise in cyber security, economic risk modeling and cyber insurance. Cyence also undertook a process to generate event scenarios, challenge assumptions and produce loss estimates. In its loss scenarios, insured losses as a percentage of overall economic losses ranged from 7% to 17%. While these insured portions are relatively low, cyber exposures will become more critical to A.M. Best’s rating process as cyber insurance premiums and limits rise. Ultimately, A.M. Best believes this type of collaboration by cyber modelers and insurers, with each focusing on some of the many other aspects and scenarios of this difficult risk, is a positive step forward for the cyber insurance market.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=263740.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

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Senior Financial Analyst

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Source: A.M. Best