Despite noting the “almost limitless” potential of the cyber re/insurance market, SCOR’s CEO, Thierry Léger, has observed that it can only grow at the pace of capacity, meaning it will chiefly be an opportunity for the next few decades, rather than the next few years.
Discussing cyber risk at the 66th Rendez-Vous de Septembre (RVS) in Monte Carlo, Léger highlighted that one of the main difficulties with the market is that it accumulates worldwide.
“Everything’s correlated, and therefore everything accumulates, which massively reduces diversification and increases the pressure on the insurance world,” he said.
Nonetheless, Léger went on to state that even though cyber is a market with an incredible protection gap of well above 90%, the opportunity here is immense, and “almost limitless”.
“However, we are limited by the capability to provide enough capacity, which is why, I think in the longer term, this is a market that we grow at the pace we can build capacity, which means this is going to be an opportunity for the next decades, rather than just years,” Léger continued.
Discussing what needs to be done to get more capacity into the market, and whether there needs to be more interaction with the public sector to encourage that capacity, Léger said, “We don’t think by just projecting these type of scenarios that it will make government or private partnerships work.”
Despite saying that he hopes it will never happen, Léger noted that a rather large cyber event would probably be needed to get more capacity into the market.
He concluded, “So the difference between our gross and net capacity has been constantly growing in cyber, which shows that we are stretching beyond our energy to make this capacity available to our clients.”
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