Gaining a clear view of the global cyber re/insurance industry can be difficult, particularly for those not actively engaged in it, according to PCS, the loss analysis subsidiary of Verisk.
As the sector has grown, PCS says even the largest players cannot see the entire market, which can create blindspots for actuaries and risk management professionals.
This led to the launch of PCS Cyber RLM in October 2020, which is a database of the industry's largest affirmative cyber insurance programmes.
PCS sources its data from around the market, working with more than 20 companies worldwide to put together a view of the largest programmes and what different loss scenarios in these cohorts could mean for the future of the cyber sector.
For example, the PCS Cyber RLM data set shows programmes with at least $100m in limit account for roughly half the cyber premium written globally, and they represent a significant concentration.
This analysis is valuable because PCS says it means just a handful of large losses could eradicate a year's premium for the large risk segment, a loss that would take decades to earn back.
Tom Johansmeyer, head of PCS, says his team have calculated there is about $5bn in global affirmative cyber insurance premium and in addition to that as much as $2.5bn in global reinsurance premium.
He comments: "More than half of that reinsurance premium sits with four companies, so it's a massively concentrated market. Ultimately, only a few players are holding a significant amount of risk. It is not the stuff that dreams are made of.
"This leaves very few options for risk and capital management. If insurers want to write more insurance business the way they have been, they need more access to reinsurance, and reinsurance is getting more difficult because of concentration issues."
Johansmeyer adds: "To break the cycle, something needs to change. PCS Cyber RLM is unique because it makes possible the analysis necessary to write and retain more risk, transfer it more confidently, and potentially unlock new sources of capital, including in the ILS market."
