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Chubb (Zurich), the world’s largest publicly traded property and casualty insurance company, has signed an agreement for use of San Francisco-based CyberCube’s analytics to supplement the insurer’s ability to quantify and better understand systemic risks across its commercial cyber portfolio, according to a vendor statement.
“Cyber is one of the most complex risks facing insurers in the 21st century,” comments Pascal Millaire, CEO of CyberCube. “Data-driven tools can be extremely valuable when it comes to managing cyber aggregation. We are pleased to support Chubb, a recognized leader in the cyber insurance space, by providing them with additional insights into the systematic risks and other cyber-related exposures within their cyber portfolio.”
As cyber risks grow in scope and complexity, insurers are becoming more sophisticated in how to allocate their capital to this risk, according to Karlyn Carnahan, Head of analyst firm Celent’s (Boston) property casualty practice for the Americas. However, cyber requires a different way of modeling the exposure across the book than other perils in order to understand the probable impact, she stresses. “Modeling tools specific to cyber exposures are becoming more available, and more robust—balancing factors such as technical issues, people/process issues, and the likelihood of spread and recurrence,” Carnahan adds. “This allows insurers and reinsurers to better evaluate their risks at both a granular level and a book level and make smarter decisions about capital allocation.”
Understanding Systemic Risk is Key
Insurers are still in the early stages of understanding how cyber exposures behave, particularly in cases of large cyber-hacking events, affirms Matthew Josefowicz, CEO of research and advisory firm Novarica (Boston). “Understanding systemic risk is key to the long-term viability of cyber coverage,” Josefowicz comments. “Right now, most underwriters are managing exposure with caps on individual policies, but we’ve yet to have a massive number of claims hit at the same time—it’s like property coverage without catastrophe modeling.”
“Insurers have decades of experience modeling catastrophic risk from natural catastrophes. Modeling catastrophic cyber events requires access to different sources of data and new technology tools,” adds CyberCube’s Millaire. “CyberCube has distinctive access to data on millions of companies and over one thousand single points of technology failure that enables leading insurers to model cyber risk in a way that no one else can.”