Munich Re's N.A. Cyber Head: Cyber Market Hardening Shows No Signs of Slowing
The cyber market remains turbulent due to increased claims, said Bob Parisi, head of cyber solutions North America, Munich Re. He spoke with Insider Engage at the RIMS 2022 conference in San Francisco.
How would you describe the current cyber market?
I would say turbulent at the moment. We've seen the market that's been hardening now for approximately two years, with no real signs of slowing down. Coverage, pricing, and capacity are all going through that hardening cycle.
We'll see where it ends but it's a reaction to the fact that claims are being paid, losses are being paid. The markets are understanding the risk better so hardening, turbulent, correcting — a lot of different ways to describe it.
How do you model cyber risk?
I'm not the modeling guy, but we have an extensive number of colleagues back in Munich. We take in as much data as we can we, we try and look at it from simulations, from scenarios, tapping into a variety of experts. One of the things we're doing is to try and find a way to get more inside data from our policyholders. Hopefully to make it a more transparent underwriting but also to get us more data that we can use. The company that had the claim or the big loss — what did their environment look like? We can start putting things in place, and then also look at systemic risk and aggregation and how we can address that and better understand it?
How do you see the market evolving? How are the risks evolving?
The market is evolving, and hopefully evolving in a way that makes it more sustainable as we go forward because the risks are certainly evolving in exactly the other way. Threats are increasing, technology is becoming more utilized by companies. We've just gone through two years where everyone had to suddenly figure out overnight how to do remote work. So what you've seen is an increase in the threats and the perils. Right now the conversation is consumed with a lot of discussion around war and ransomware. But that ignores the fact that technology generally — information technology, operational technology — are part and parcel of everything that we do and that carries a lot of different types of risks. Our modeling tries to understand that so that we can provide effective and effective coverage that addresses those risks for clients.
How do you see the market evolving in the next five to 10 years?
I wish I knew but what you're going to see is a continued evolution towards maturity. You're going to see a market that is moving towards ways to keep itself sustainable for the clients so that were there in five or 10 years. You're going to continue to see pricing continue to harden. You're going to see conditions looked at very, with deep scrutiny. But other than that, I'm not going to try and predict where the market is going to be in five years.