Aon has tied-up with Hudson Structured Capital Management (HSCM) to roll out a new product to protect re/insurers against systemic and catastrophic cyber events.
This cover is designed to protect against increasing cyber loss aggregations on re/insurers’ balance sheets and offers limits of up to $70m.
It is structured to protect the cedent from the impact of catastrophic cyber market losses. These include losses resulting from events such as self-propagating malware or wiperware, distributed denial of service, a significant cloud outage, or certificate revocation.
The companies have already closed the first transaction, a retrocession contract on behalf of an undisclosed cedent.
Aon Reinsurance Solutions International head of Cyber Luke Foord-Kelcey said: “Combined with the multi-model approach from Aon’s dedicated cyber analytics team, this has enabled us to develop a platform with HSCM that allows capital markets to participate in the fast-growing cyber sector in a manner that works for both cedents and investors and, importantly, that enables investors to fund limits previously unseen in this space.”
HSCM Bermuda partner and chief underwriting officer Edouard Herberstein added: “This is a great example of insurance and ILS markets offering risk transfer solutions for intangible assets, an area of the market where we expect to see a growing number of opportunities in the years to come.”
According to Aon and market analysis, the cyber insurance market is expected to continue expanding, with premiums expected to hit $20bn by 2025.
The market is driven by evolving awareness at C-suite level, reputational risk, and regulation, alongside an increasing number of cyber attacks, the firm noted.
In August this year, Aon and Willis Towers Watson shareholders approved the proposed merger of their businesses, which was announced earlier in March.
The merger is expected to close in the first half of next year.