Chief of markets Tiernan confirms initial approval as market seeks ’sensible growth in a pragmatic way’
Lloyd’s chief of markets Patrick Tiernan has confirmed initial approval has been received for the market’s first standalone cyber syndicate.
During a quarterly message to the market delivered last week (22 September 2022), Tiernan said the syndicate had received initial approval and that Lloyd’s was determined to play a role in driving maturity in cyber classes.
“Lloyd’s has around 20% of the global cyber market,” he explained. “We believe, given the share of the market we currently have, Lloyd’s has a role to play in maturing the market.”
Lloyd’s recently issues firm exclusion for some areas of cyber risk – including state derived and war risks – and Tiernan said that, far from looking to shy away from the class, Lloyd’s was willing to write business.
“We are encouraging sensible growth in a pragmatic way,” he explained. “I can say that a standalone cyber syndicate has been given approval.
”We are here as a market to respond to a need, but at present we are aware that demand outweighs supply.”
Tiernan said the war in Ukraine and growing geopolitical tensions in Asia had created the need for the market to construct three new realistic disaster scenarios (RDS) around geopolitical risk, although at present no timescale as to when they will be completed has been revealed.
He said the RDS were being created to ensure that the market understood the threats and was well capitalised to respond.
“For the market, Ukraine is a developing situation,” he explained. “We have learned a lot and we need to apply this to other areas of tension.
“We need to understand what the potential accumulations might be and we will be working with the Lloyd’s Market Association and external experts to build the scenarios.
“These will be realistic scenarios and not best estimates of what we believe might happen.”
He added that the key aim of the RDS was to explore the “contagion” risk that a deterioration in various regions may have beyond the obvious classes such as political violence, trade credit and aviation.
However, Tiernan said that opportunities remained for the market despite the challenges it faced.
“We need to get the balance between threat and opportunity,” he said. “We are at our most innovative and creative at those time of extreme stress.