US Cyber Industry Loss Index plays important role in cyber-ILS expansion

PERILS and CyberAcuView, the independent US-based organisation set-up by leading cyber insurers for the benefit of the cyber insurance market, announced the use of their US Cyber Industry Loss Index in the first cyber insurance risk transactions using an industry loss trigger.

The US Cyber Industry Loss Index, launched in September 2023, reports affirmative US primary cyber market losses resulting from systemic cyber incidents affecting more than one insurer and policyholder for events exceeding USD 500 mn industry loss.

As the risk of systemic cyber losses continues to grow, the index is designed to provide an independent cyber industry loss estimate arising from US systemic loss events for use in alternative capital transactions.

The index is used to produce an index value to determine the payouts of the protection under Insurance Linked Securities (cyber-ILS) and Industry Loss Warranty (ILW) contracts.

US Cyber Industry Loss Index plays important role in cyber-ILS expansion

The cyber industry losses are based upon loss data collected from US cyber insurers by CyberAcuView with subsequent industry-level calculations jointly signed-off by CyberAcuView and PERILS. All data services are conducted under strict antitrust supervision.

Since its launch in September, PERILS and CyberAcuView have actively engaged with major stakeholders in the industry to raise awareness and acceptance of the loss index.

This extensive work culminated in the first cyber 144a ILS being placed using an industry loss trigger (sponsored by Swiss Re) as well as an ILW reinsurance contract which was completed using the index.

Commenting on the announcement, Christoph Oehy, CEO of PERILS, said: “In recent months, we have engaged closely with the market, while risk protection sellers and buyers have undertaken extensive due diligence on the index. It is clearly a very positive development to see its acceptance by the industry as demonstrated by these placements”.

As the risk of systemic cyber loss events grows, it is increasingly important to ensure sustainable capacity is available to support the US cyber sector.

The loss index can play an important role in enabling the expansion of the cyber-ILS and ILW markets by providing independent systemic loss estimates.