Other parts of this series:
In my previous blog post I examined how cyber security ecosystems will allow insurers to take a leading role in the future of this fast-emerging market. I also looked at what we feel are the integral components of an end-to-end cyber protection offering.
Why London has the edge as a global cyber insurance centre
In our work (with the City of London Corporation and AXA XL) examining the conditions required for insurers to develop such market-leading propositions, the London Market clearly stands out.
It already plays a major role in the global cyber insurance market. And as customer propositions evolve, we believe it combines all the elements needed for a world class cyber security ecosystem. As such, London has a pivotal role to play in the future of this sector.
There are several factors that will drive London’s leading position. In addition to its longstanding history, the strength of its market infrastructure and its robust legal and regulatory frameworks, in my mind there are a few key areas to highlight.
- An unrivalled concentration of cyber players and talent
London benefits from world-class cyber law firms and litigation experts, a thriving cyber resilience insurtech community, large-scale security consulting firms and, of course, the vast network of brokers and insurers known for their innovative underwriting. This network of experts provides an environment that is ripe for partnership and ecosystem innovation.
The physical concentration of companies and people also means that London can address one of the core challenges in the cyber sector: the war for security talent. While large corporates may generally have strong security capabilities, mid-market businesses and SMEs struggle to recruit or access the necessary talent. London Market insurers have clear opportunities to meet this need with their cyber protection propositions and ecosystem partners.
- A global mindset and scale
Cyber is a global peril. Threat actors such as nation states operate on the global stage. And a vulnerability in a popular technology platform could expose firms to the same risk worldwide. As a result, global underwriting centres such as London tend to have an edge over their local counterparts. This is due to the economies of scale inherent in understanding the threat actors, vulnerabilities and resulting risks.
- The potential for collaboration supported by shared data and cutting-edge analytics
Successful cyber protection ecosystems will require pools of shared data. These will be supported by cutting edge analytical techniques, such as deep learning and natural language processing. Not only will this help in areas such as identifying dark web threat data, but it will also enable insurers to quantify and price cyber risk more accurately.
These types of data sharing initiatives are most likely to form in markets where there is a high concentration of expertise, and a long history of mutual trust. The London insurance market is second to none in these respects.
The London Market and its insurers must seize cyber protection opportunities
I have already highlighted how insurers should seize game-changing opportunities to create and participate in innovative cyber security ecosystems. And how those who focus on end-to-end protection can develop winning propositions in this fast-emerging area.
Given the factors I have outlined above, insurers committed to succeeding in this space will certainly benefit from leveraging the unrivalled environment and unique position of the London Market. Its wider cyber security ecosystem provides precisely the conditions insurers need to develop market-leading propositions.
In turn, the City of London has a huge opportunity to bolster its position as a major global cyber insurance market and as a genuine centre of cyber excellence, supporting the success of those insurers that choose to underwrite in this innovative city.