Enhancing cyber insurance strategies: exploring reinsurance and alternative risk transfer approaches

Cyber reinsurance is crucial in fostering sustainable growth and enhancing risk transfer strategies within the cyber insurance sector. Approximately 50%–65% of global cyber insurance premiums were ceded to the reinsurance market in 2022. While current reinsurance capacity is adequate to meet prevailing market demands, significant increases are needed to safeguard international commerce and close the cyber protection gap. This study analyzes the management of cyber risk accumulation by cyber reinsurance. The research creates and analyzes a dataset of semi-structured interviews with twenty cyber reinsurance market participants. The findings indicate that due to the highly volatile nature of cyber risks, cyber reinsurers enforce stringent capacity provision criteria on primary insurers. It is highlighted that reinsurers diversify their aggregate and cyber risk accumulation across various factors. This study offers an in-depth analysis of cyber insurance within the reinsurance framework, detailing collective strategies for implementing ILS and PPPs to mitigate barriers. These measures aim to enhance cyber capacity within the market, ensuring that cyber insurance remains accessible and affordable.