On the cyber insurance front, specialist insurer Beazley has announced the launch of the market’s first cyber catastrophe bond.
Beazley said that the $45 million private bond marks the first time a liquid insurance-linked securities instrument has been created for cyber catastrophe risks. The bind is fully tradable under Rule 144A resale. It gives the company indemnity against all perils over a $300 million catastrophe event, with the possibility of additional tranches being released in 2023 and beyond.
Why do we care?
This is a maturation of the insurance space as the industry looks for a way to monetize the risk. I’m no investment expert here, so I won’t discuss how the industry makes money with this. I’ll observe the market, creating new avenues to offset the risk. This isn’t an industry that intentionally screws up; someone has done the math to justify this as a money maker.
They’re betting on breaches.