Beazley

History

2023: Cyberattack-linked bond issue

On January 9, 2023, London-based insurer Beazley issued cyber crash bonds for the first time in the industry. It is noted that this is dictated by growing fears about cyber attacks and worsening financial consequences from hacker hacks.

A $45 million bond provides compensation for any cyber incidents that cause more than $300 million in damage. The so-called catastrophic bond is a hybrid of bond and insurance product. They are issued by insurance companies in order to pass on to investors some of the losses on insurance in case of emergency events, for example, earthquakes, hurricanes or floods. In the case of the Beazley product, this is the first time we are talking about disasters in the cyber industry.

Beazley issues bonds tied to cyber attacks

The bond is intended to cover unlikely catastrophic and systemic events. The papers are backed by a group of ILS investors, including Fermat Capital Management. We are at the forefront of delivering new solutions that enable the cyber insurance market to grow to the size customers need, Beazley said in a statement.

By early 2023, the cyber insurance market had grown sharply due to the spread of ransomware. Along with this, customers have faced a significant increase in premiums, and it is becoming more and more difficult to get coverage. The volume of claims is so high that Lloyd's of London, a large insurance market in which Beazley is a member, in 2022 instructed its members to tighten their cyber insurance policy due to the growing risk of losses. Beazley's new bonds will help protect against such ruinous payments. In the absence of a cyber crash, Beazley will pay investors interest on the bonds and ultimately refund the principal.^[1]

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