How Important is Liquidity to Accessing ILS Capital for Cyber Re/Insurance Risk Transfer?
Keywords:
Cyber Insurance, Cyber Reinsurance, Insurance Linked Securities, Capital Markets, ReinsuranceAbstract
The insurance linked securities (ILS) market has long been seen as a potential participant in cyber insurance and reinsurance (“re/insurance”) risks. ILS managers have long clamored for access to liquid cyber re/insurance instruments and indicated that liquidity would be crucial to scaling their involvement. The issuance of the first cyber catastrophe bonds came alongside first-of-its-kind qualitative research on the importance of liquidity to ILS managers with regard to their prospective participation in the cyber ILS market. This paper makes a unique contribution to the literature by analyzing the views of cyber ILS managers with regard to the need for liquid instruments and then linking those findings to the early cyber catastrophe bond activity of 2023 and 2024.
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