In an exclusive interview with Asia Insurance Post, Teck Siong Ng, Underwriter, Cyber & Technology, Beazley speaks about the latest trends in Asia’s cyber insurance market and outlines his company’s strategies to grow its business in the region
Edited Excerpts:
What kind of broad trends is the APAC cyber insurance market witnessing? Has it stabilised in terms of capacity, claims and pricing after experiencing shocks as a result of the pandemic?
The growth of ransomware attacks during the pandemic brought about a period of steep rate adjustment, but since then we have seen the market stabilise in terms of both rates and capacity.
Continuing this trend, insurers in Asia are increasing both cyber capacity and expertise, demonstrating that the APAC cyber insurance market is poised to continue its recent growth.
The key drivers of this growth have been increased awareness of cyber risks and the protection that cyber insurance policies offer, and widespread digitalisation which exposes businesses in Asia to greater cyber risk.
However, while cyber-attacks targeting businesses in Asia are on the rise, our claims cyber both in number and amount are broadly stable.
Which sectors are driving demand for cyber insurance policies in the region and are more customers opting for larger size policies?
Asia’s cyber insurance market is seeing increased demand from both existing policyholders looking to bolster their policies and from new customers looking to take out a cyber insurance policy for the first time.
Large businesses, which typically have greater budgets and a more structured approach to risk management, are driving the demand for cyber insurance in the Asian market. These businesses are engaging with relevant experts, allowing them to conduct an in-depth risk quantification and business impact analysis, ultimately positioning cyber insurance as a safety net for the company’s balance sheet.
In developing countries, regulated industries such as financial services, telecommunications and essential services are driving the demand for cyber insurance policies. Whereas, in developed countries, businesses are increasingly turning to cyber insurance to address concerns around reputation and privacy-related regulations.
Are you expecting prices to rise in the next renewals period?
It is important to be aware of the wider context within the cyber insurance market, which is that there has been a steep increase in rates over the last two years.
Insurers are better equipped than ever to assess how exposed a business is to cyber risk.
For those businesses that are proactively investing in cybersecurity measures, we expect prices to remain stable. This is provided that there are no major surprises or unforeseen events that occur between now and the next renewals period which could be deemed significant from a cyber insurance perspective.
However, businesses that are not actively investing in cybersecurity measures, and are more exposed to cyber-attacks as a consequence, may be susceptible to price rises in their renewal.
What is the size of cyber insurance market in the Asia Pacific region and is the market experiencing significant growth? Which countries in the APAC region are driving demand for cyber insurance?
APAC has one of the fastest growing cyber insurance markets in the world, primarily driven by legislative reform and the increasing number of cyber-attacks targeting businesses that lead to data breaches.
Within APAC specifically, Singapore and Hong Kong are Beazley’s two largest markets for
cyber insurance. Demand for cyber insurance is also starting to pick up in South-East Asian countries, where legislative reform has had a significant impact on the risk landscape that businesses operate in.
How prevalent is the phenomenon of silent cyber in the APAC cyber insurance market?
Beazley is committed to ensuring that all cyber risk exposures, including systemic risks, which we deem insurable, are well addressed within the cyber insurance policies sold to customers.
For those systemic cyber risks that Beazley deems uninsurable, we clearly outline the scope of all policies sold, ensuring that policyholders are fully aware of what does and what does not fall within the realms of the policy. This is communicated to potential policyholders at the earliest opportunity.
How are Insurance-Linked Securities supporting the APAC cyber insurance market?
Significantly, Beazley is the first insurer to enter the cat bond market, providing capital market investors the ability to offload an ever-growing amount of cyber catastrophic risk.
Developing effective solutions for cyber catastrophic risk is vital to ensure the continued supply of capacity to the wider cyber insurance market, as well as to meet the growing demand for cover that Beazley is anticipating from business and wider society
What kind of cyber products does Beazley offer in the APAC region and is it a profitable business? What are Beazley’s plans for future growth in the region?
Beazley offers the InfoSec cyber product in the APAC region, providing comprehensive first party loss and third party liability coverages.
Beazley is committed to continue investing in Asia to secure continued growth. Team
headcount in the region has grown from two to four, demonstrating the increased demand Beazley has seen for its services.
To better serve the region, we are also planning to enhance our Cyber Services offering, to enhance the cyber solutions that we offer in the APAC region.
How much exposure does Beazley have in the Indian cyber insurance market? How do you assess the market’s growth prospects?
Beazley’s presence in the Indian cyber insurance market is still in its infancy. The team
currently has limited experience operating in this market, instead focussing on
regions/countries in APAC where we have greater experience.
However, we will keep an eye out for developments in the Indian cyber insurance market so that we can formulate the right strategy to enter the market.