German insurers call for state-backed systemic cyber pool

The German insurance association (GDV) has called for a state-backed insurance pool that would cover rising systemic cyber risk and help protect Germany’s position as a sought after business location. The association has also called for a British-style approach to natural hazard risks that would deliver a public-private partnership with ultimate state backing but a strong focus on loss prevention and risk management. Mandatory nat cat cover is not the way ahead, said the GDV during its recent annual press briefing. The association made these calls as Germany prepares for its snap election on 23 February being held after Olaf Scholz’s governing coalition lost a vote of confidence in late December. The GDV wants the new government to focus on cyber risk as the German economy stumbles into 2025 after a period of weak growth. The GDV said that the German state and economy needs to “get better on all levels” in relation to cyber. “Making the economy more resilient to cyber risks, protecting companies from cyber risks also determines Germany’s competitiveness. We have to get better here on all levels,” said GDV president Norbert Rollinger. “Inadequate protection against cyberattacks is a problem for which the economy is ill-prepared,” he added. Rollinger pointed out that cyber insurance is growing more slowly than expected, particularly among small and medium-sized companies that still underestimate the danger. While appetite and capacity for cyber business has improved since the height of the recent hard market, the GDV said that carriers are increasingly wary of the systemic risk. “Insurers are reluctant to underwrite because a cyber pandemic could lead to high losses. After cyber insurance grew by 50% per year some time ago, the division's premium income is likely to have only increased by single digits in 2024,” noted the association. This is why greater state involvement is needed, said the GDV. “Against this background, the insurance industry is demanding clear responsibilities when it comes to cybersecurity: a central office that recognises crises early and reacts quickly,” it said. “There should also be emergency plans and reaction strategies so that a cyberattack does not catch the German economy unprepared. Cyber security is a top priority – both in companies and in politics,” said Rollinger. The GDV president said that systemic damage must be covered. Private sector insurance can cover many risks, but not the consequences of a cyber pandemic, he pointed out. “We are proposing a public-private partnership model for this,” said Rollinger. “Together with the state, we want to create a robust structure that prepares Germany as a business location in the event of a cyber pandemic and effectively protects our economy in an emergency,” added Rollinger. The GDV has urged the new German government to “follow the British model” for natural hazards to keep these risks insurable in the long term. “The state and insurers should work together after the federal election to keep natural hazards insurable in the long term,” said Rollinger. “Compulsory insurance is not a solution because it neither prevents damage nor reduces premiums,” he added. “Successful models abroad, such as the British system, could serve as a model for ensuring risk-based and market-based protection,” concluded the GDV.

German insurers call for state-backed systemic cyber pool

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