For cyber to grow at Lloyd’s we must manage our potential risks: Patrick Tiernan
Speaking at Lloyd’s Q4 2023 Market Message, Patrick Tiernan, Chief of Markets, explained that cyber underwriting will remain a key clear focus class of growth for 2024.
Tiernan stated that for 2024, plan GDP growth is shy of 20%, which remains on par with the growth that Lloyd’s witnessed in 2023.
He said: “Pressure on labor is evident, but for the most part the leadership positions of the major Lloyd’s players protect against the worst excesses.
“We are watching closely but have no immediate cause for concern given that well over 75% of the class is concentrated with our high performing and good syndicates.”
Moving forward, Tiernan explained that in order for cyber to grow sustainably at Lloyd’s, there needs to be a focus on managing potential risks and strengthening quantification capabilities.
“This means maintaining profitability across the rating cycle, measuring the volatility, avoiding outsize losses and holding adequate capital. And our ambition is to facilitate complimentary markets for all types of events and cyber including the most severe.”
When it comes to Lloyd’s Market Management Strategy,Tiernan noted that there will be four pillars to the cyber strategy, which will build on the work of the 2023 cyber market premortem.
“Pillar one will assess capability. This will ensure that growth is commensurate with the underwriting capability and the syndicates.
“Pillar two will focus on understanding exposure and this will comprise of the collection of cyber exposure aggregates by peril.”
As for pillar three, Tiernan explained that this is all about preparing for a major event.
“Here we will look at the application of the market turning event principles and the design of rules around the early identification of cyber catastrophes.”
Lastly, pillar four will be dedicated to developing insights and market intelligence so that Lloyd’s “remains at the forefront of cyber risk.”
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