Hannover Rück warns that cyber insurance premiums underprice imminent major loss risk
Executive summary: The CEO of Hannover Rück, the third-largest reinsurer, warned that a major cyber loss event is imminent and that cyber insurance premiums do not adequately reflect the underlying risk, urging higher rates. This signals growing concern that cyber risk is being underpriced, which could lead to premium increases, adjustments in reinsurance capital models, and greater scrutiny from rating agencies and regulators.
Who is involved: Hannover Rück (CEO Jungsthoefel), rating agencies, and the broader cyber insurance and reinsurance market.
Likely next: Insurers and reinsurers may review and raise cyber premiums; rating agencies could incorporate cyber risk more explicitly into credit assessments; regulators may examine solvency adequacy for cyber exposures.
Hannover Rück’s CEO stated that a significant cyber loss event is expected and that current premiums in the cyber insurance market do not reflect the true risk level, calling for higher rates. He also noted that rating agencies are warning about cyber exposures, signaling broader market concern. The statement highlights a potential mismatch between pricing and risk that could trigger a repricing cycle in the cyber reinsurance sector.
Timeline
- — Rückversicherung: „Ein Großschadenereignis wird kommen" – Hannover-Rück-Chef fordert höhere Prämien (Handelsblatt)
Analysis — what this means
Sectors affected
- Cyber insurance
- Reinsurance
Historical parallels
- NotPetya cyber attack (June 2017) caused estimated global losses exceeding $10 billion.
- WannaCry ransomware outbreak (May 2017) disrupted hundreds of thousands of systems worldwide.
- SolarWinds supply‑chain breach (discovered Dec 2020) led to widespread data theft and incident response costs.