Wednesday, October 9, 2024

HomeCyberSecurityMarsh launches group captive insurance firm for cyber

Marsh launches group captive insurance firm for cyber

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Dive Brief: 

  • Marsh, a leading global insurance broker, launched a group captive insurance company for cyber on Monday, aiming to provide greater stability for major companies in what has been a highly volatile market. 
  • Group captives are insurance entities controlled by their members, and are designed to offer greater control and less volatility than regular insurance. The Bermuda-based company, called Edgware Re, will allow participating members to buy up to $10 million in insurance or reinsurance coverage based on the needs of the company.  
  • The company was created to provide more stability, control and contract certainty than what is currently available on the market, according to Marsh. The program is designed to meet the needs of large, financially stable companies with strong cyber hygiene programs. 

Dive Insight: 

Marsh customers have been asking for more strategic risk financing options after years of pricing volatility, followed by modification of coverage by insurers, according to the company. 

“The cyber insurance market continues to mature to address a dynamic threat environment as well as the evolving risk management needs of insureds,” Timothy Marlin, senior vice president in Marsh’s U.S. and Canada cyber practice, said via email. “The creation of Edgware Re is just another example of that maturation process by providing an additional strategic risk financing option to financially stable companies with strong cybersecurity hygiene.”  

The insurance industry has gone through several years of volatility with rising premiums and reduced coverage. However, in recent years that volatility has begun to moderate as a wider pool of organizations began to enter the market and insurance companies added additional benchmarks to policies to make sure companies were taking steps to mitigate risk. 

“During the period between 2020 and 2022, when the cyber pricing was hard with average increases of 20% and high risk verticals and businesses experiencing more than 50% — there was an uptick in the transfer of cyber risk to captives,” Fred Eslami, associate director, AM Best, said via email. “The current softening pricing environment is not necessarily an indicator that risk has come down as insurers are still tight in terms of underwriting standards and captives (either formed by insurers or corporations) could be a strategic use of risk transfer, better pooling, and using economies of scale for risk management and reinsurance purposes.”

Marsh will provide various services, including incident response, vendor engagement, captive management and claims advocacy support to Edgware Re. 

In January, pharmaceutical giant Merck reached a settlement with insurers in the closely watched NotPetya case, which dealt with coverage exclusions under the company’s “all risks” property insurance policy. 


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