Culhane Meadows’ Chicago partner Daniel Struck was recently quoted in an article for InformationWeek which discusses a first-of-its-kind $45 million cyber catastrophe bond and what it means for the the cyber insurance market.
Here are a few excerpts from the article:
In January, specialist insurer Beazley announced the launch of a $45 million cyber catastrophe bond, the first insurance-linked securities (ILS) instrument established in the cyber insurance market. Catastrophe (CAT) bonds allow insurance companies to transfer risk to investors. These bonds pay out to insurance companies if a specific, predetermined event occurs.
CAT bonds are traditionally found in the property and casualty markets, paid to insurance companies in the event of a natural disaster, like a hurricane or tornado, Daniel J. Struck, a partner and litigator at full-service law firm Culhane Meadows, explains. “For the cyber insurance industry, this bond represents an alternate means of spreading coverage risks and a potential new source of capital,” he tells InformationWeek.
What does this new bond mean for the evolving cyber insurance market?
Defining a Cyber Catastrophe
“This cyber catastrophe bond is a novel product, and there is no market-wide standard definition of a cyber catastrophe,” Struck says. The Beazley bond gives it indemnity against catastrophic events that exceed $300 million.
The risk of catastrophic cyber events like that is growing. “As the world becomes more closely networked and the delivery of key goods and services becomes more dependent on the seamless operation of those networks, it is increasingly possible that an adverse event with widespread negative consequences could lead to claim payments that exceed $300 million,” says Struck.
Demand for cyber insurance is unlikely to wane as threats continue to grow. But cyber insurance companies, like Beazley, could change the way they approach offering coverage.
Read the entire article HERE.
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