1 May 2013Analysis

Customisation key to taking on cyber risk

The captive sector is emerging as a viable solution to cyber risk. It will be in providing customised solutions to their parents that captives can truly add value.

That is the view of Robert Johnson, managing director at Aon Risk Solutions in Bermuda, who said to Captive International that cyber coverage – and the potential to run the line through a captive – is forming an increasingly prominent part of conversations in the captive sector.

“We see cyber as a significant emerging risk. Discussions are taking place at the board room level, at key renewal dates and during strategic planning meetings”, said Johnson, with efforts to mitigate risk exposures increasingly on the minds of international parents. He said that Aon had seen a number of successes in the captive area, but that as with any emerging line, customisation of the captive programme remains a key consideration.

“Like any new line, the decision to assume an exposure such as cyber risk  in the captive depends upon risk appetite, re/insurance relationships,  how the risk is customised in the captive and possible capital and surplus considerations”, said Johnson.

He said that clients need to carefully quantify and model their cyber risk exposure, factor in re/insurance options and once comfortable with the risk, look at the captive as an option in the placement tower, whether on a primary basis or excess.