Cyber will be the largest risk code for Lloyd’s of London in 2023. A risk code is a classification system that Lloyd’s uses to standardise risks and rank their severity.
The fact cyber will be Lloyd’s largest risk code next year is very telling considering the cyber market is relatively immature compared to other lines of business and has only been around for about 20 years.
According to Andy Holmes – chief underwriting officer at MGA CFC Underwriting, the recent work of the collective cyber insurance market to put this risk so centrally on Lloyd’s agenda is something to be proud of.
Cyber has had to grow up – in many ways it has been the best and the worst of times for cyber risks. That’s forced the insurance market to reappraise its pricing, its risk selection and the value proposition to customers, investors and regulators.
Cyber insurance is now starting to “lead the way” – for example, by asking customers fewer questions in the onboarding process and finding out more about personal risk profiles.
The cyber insurance market has also played a hand in breaking down the concept of insurance being an annual exercise – there is talk around Lloyd’s Blueprint Two, for example, about paying customers’ claims before they even happen. Cyber insurance has begun to take a more preventative approach.
Despite the strides that the cyber insurance market is making, Holmes added that some of the value of cyber insurance products has been lost due to systemic issues and keeping the regulator happy.