Bermuda captives proving their value for cyber
Bermuda captives’ gross written premiums for cyber risks increased 42% to $102.6 million for the year ending 2020, according to the Bermuda Monetary Authority. The number of captives writing affirmative coverage, meanwhile, was up from 20 in 2019 to 24 by the end of 2020, with more growth expected to come.
The BMA’s Cyber Underwriting Report 2021 shows captives continuing to “serve their purpose as a risk management tool for companies seeking to manage their own cyber risk exposures”.
The report’s authors write: “As the captive market continues to prove its value to organisations in managing cyber risk exposure, the Authority expects to see a continued increase in the interest in cyber insurance within the sector.”
They add: “The Bermuda captive market remains steady and versatile, accommodating both the new captive formations writing cyber-related exposures and the expansion of current captives adding cyber exposures or increasing premiums in existing cyber policies.”
Class 2 insurers wrote more than half (58%) of the total captive GWP, followed by Class 3 (36%) and Class 1 captive insurers (6%). A Class 3 insurer had the largest individual cyber GWP, however, at over $35m.
Overall, across commercial insurers, groups and captives, the report found a steady increase in both gross and net cyber exposures, at $233 billion and $110bn respectively in 2020, against $209bn and $70bn in 2019.
“The COVID-19 pandemic highlighted growing interest and concerns around cyber risk and the need for a robust cyber insurance market. As organisations are forced to continue to operate in remote working environments, cyber threat actors continue to exploit inherent cybersecurity weaknesses,” the report notes.
“Given this, the demand for cyber coverage continues to grow, highlighting the need for the insurance sector to continue improving on its cyber underwriting practices.”