Munich Re urges European politicians to back cyber pool

Munich Re has urged policymakers in Europe and Germany to throw their weight behind a state-funded backstop for systemic cyber risks, and called on governments to make certain risk management requirements mandatory to boost the private market for extreme weather events. The move from the world’s largest reinsurer will no doubt be supported by Ferma. Along with a group of leading (re)insurers and brokers, including Munich Re, the European risk management federation called on the EU last summer to reignite discussions over a public-private-partnership (PPP) to help manage and transfer systemic cyber risks. Releasing a joint report, the key stakeholders urged public bodies to move beyond theoretical PPP solutions and come up with practical moves amid growing uncertainty for insurance buyers when it comes to areas such as cyber war. Discussions over PPPs for cyber and other systemic risk really began when it became clear that many business costs from the pandemic would fall on the state anyway. But as the world moved from one crisis to another, these discussions seemed to die down as politicians focused on the next problem. Philippe Cotelle, vice-president of Ferma and chair of its digital committee, said back in June that it is vitally important to “bridge the uncertainty that is growing around catastrophic cyber loss scenarios that are not covered by insurance”. Cotelle said Ferma and the other market players wanted the EC and public authorities to launch a conference with all the different stakeholders to come up with potential PPP solutions. It wanted the EC to develop a working group of representatives from the public and private sectors “to discuss and then implement some key measures for the benefit of Europe”. But it seems that progress has not moved as quickly as the report’s authors would like, with Munich Re using its annual results to again call on policymakers in Germany and Europe to properly move forward with a cyber backstop. It pointed out that dialogue is already underway in the US to deliver such a solution, suggesting Europe is falling behind. “Despite the global market for cyber insurance tripling in size in the past five years alone, a tremendous gap in coverage remains regarding cyber risks. In its role as global market leader, Munich Re is always investing in expertise and accumulation modelling – and will continue providing sustainable capacity for insurable cyber risks. However, the private sector cannot provide cover for the greatest systemic cyber risks, such as the failure of critical infrastructure or cyber war. But a potential solution to this complex problem is a governmental backstop – a precautionary measure of last resort,” said Munich Re. At the same time, it wants governments to help boost the private insurance market for nat cat risks by mandating risk prevention among business. “The private insurance industry supplies enough global capacity in principle to cover the rising risks associated with extreme weather. But prices for cover must be appropriate in order to create incentives for better preventative measures. Superior prevention can substantially reduce the losses caused by extreme weather events, in turn easing the financial burden on society,” it said. Adding: “And governments can certainly exert a positive influence on insurability and the price for insurance cover by way of state-mandated preventative measures.”

Munich Re urges European politicians to back cyber pool

Reinsurer also calls for mandatory nat cat risk prevention measures

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