Following news that Singapore will set up the world’s first commercial cyber risk pool, StrategicRISK spoke to Star Hub’s Nigel Tay to get his thoughts on what this really means for risk managers in the region.
Singapore is setting up the world’s first commercial cyber risk pool as part of efforts to develop the region’s capacity to deal with threats from cyber attacks, Finance Minister Heng Swee Keat announced at the 15th Singapore International Reinsurance Conference earlier this week.
“The pool will commit up to US$1 billion in capacity, and bring together both traditional insurance and insurance-linked securities markets to provide bespoke cyber coverage,” he said.
Heng also noted: “To date, twenty insurance firms have indicated their interest to participate in this pool, which would allow corporates in ASEAN and Asia to be protected against cyber-related losses.”
Commenting on the news, Singapore-based Star Hub leader of enterprise risk management and insurance, Nigel Tay said: ”From my conversations with risk managers, justifying the high costs of procuring cyber insurance was a key challenge. Surprisingly, many that I have spoken to have not procured some form of cyber coverage. This is despite all the attention cyber is receiving.
”The formation of the said commercial cyber risk pool shows an added political dimension but the key would be sourcing cyber insurance coverages that are palatable and affordable.”
Tay said he is hopeful the new risk pool could give the insurers the added confidence to write cyber risks for more clients at potentially better rates. ”Hopefully this will translate into a deeper knowledge base and better appreciation of a new state of things.”
”This move seems to be beneficial for the insurers and corporate risk managers. A key point to note is that cyber insurance coverages are only one part of an overarching strategy to address cyber risk and exposures and should not lead to a false sense of security,” he added.