Promoting UK Cyber Prosperity: Public-Private Cyber-Catastrophe Reinsurance
Public-Private Cyber-Catastrophe Reinsurance - Long Finance, 2015
50 Pages Posted: 7 Oct 2020
Date Written: July 01, 2015
This Long Finance research project sought to explore how cyber-catastrophe reinsurance might help mitigate cyber-risk, establish some evidence of the appetite for such reinsurance, and examine how government might best provide support for the establishment of an efficient, largely free-market solution.
Started in May 2015, the resulting report entitled "Promoting UK Cyber Prosperity: Public-Private Cyber-Catastrophe Reinsurance" was released in July 2015 (press release).
Co-sponsored by APM Group, the report explores the nature of cyber-risk and the role of cyber insurance and reinsurance as a risk mitigation tool with a focus on cyber-catastrophe events that is cyber events that could seriously affect the economy. The report explores how a public-private cyber-catastrophe reinsurance scheme could help secure ICT-based prosperity in the UK by helping insurers insure themselves to insure others. The scheme would provide cover to a group of insurers above a catastrophic loss threshold, in effect a pool funded by the insurance industry. The UK government’s role would be one of promotion and (possibly) a last resort insurer only in the event that industry retention and the scheme’s reserves have been exhausted. In all likelihood, the UK government would be a last resort insurer anyway during a cyber-catastrophe, but would benefit by having already promoted risk reduction and mitigation, as well as having accrued some financial reserves.
Long Finance engaged key stakeholders including insurance experts and professionals (existing cyber underwriters and specialist brokers), reinsurance professionals, other financial services firms (e.g. major exchanges or fintech firms), providers of cyber-protection services, law and accountancy firms and government through over 80 semi-structured interviews, a round-table, and a webinar.
Keywords: Cyber-Catastrophe, Reinsurance, Insurance, UK
JEL Classification: G22, G00
Suggested Citation: Suggested Citation