Gallagher Re’s Braney: Cyber’s breakthrough at Baden-Baden and international growth opportunities

Jen Braney, head of international cyber at Gallagher Re, discusses the significance of the first cyber event taking place at this year’s Baden-Baden meeting, as well as growth opportunities and challenges in the cyber (re)insurance space.

This year marks the first time a cyber event will take place at Baden-Baden. What does that signify for the cyber market?

It really highlights how far the interest in cyber has come. Three years ago, there wouldn’t have been enough appetite for such an event. But with the increasing digitisation of the world driving new exposures and major recent incidents such as CrowdStrike, the risks are clearer and cyber continues to be the fastest growing area in insurance. We’ve reached a point where there’s more understanding and comfort around this class of business, which makes it an attractive new area of focus for insurers that are saturated in other lines.

What do insurers looking to enter the cyber space need to know?

Having a solid reinsurance strategy is key. Reinsurance plays a much larger role in cyber than in other classes – about 50 percent of cyber insurance is transferred to reinsurers. Reinsurers don’t just provide capacity; many offer additional services such as underwriting support and modelling.

There’s also ample supply of reinsurance capacity, which gives cyber insurers the chance to get more efficient structures and pricing and generate fee income from quota share deals. Now is arguably the best time to be a buyer in cyber reinsurance.

What are the major challenges to international growth in cyber?

Competition is challenging, especially in the US market, where rates are softening, particularly for excess layers. To stand out, insurers need to offer something different, whether that's new products or entering less-saturated markets. International markets, especially regions such as Asia Pacific, offer exciting growth opportunities as demand increases.

Another challenge is ensuring that products are fit for purpose. Insurers need to be clear on who they are targeting. Are they entering a market to meet broker demand, or are they aiming to build a tailored offering? Additionally, partnering with insurtech MGAs should be seriously considered as this can give insurers a competitive edge by leveraging the MGA’s expertise in technical services and streamlined processes.

How can insurers differentiate themselves in cyber?

It’s about identifying unmet demand and tailoring products accordingly. Insurers should focus on areas where there’s demand, but not enough supply. Take cyber physical damage products, for example: demand is rising, but the market hasn’t caught up.

Also, cyber isn't just about indemnity, it's about offering risk management services. Incident response, pre-underwriting scanning and support in strengthening clients’ security can make a big difference. Those who integrate these services into their cyber offering are generally more successful.

The systemic nature of cyber risk is often a major concern. How do you view that challenge?

The interconnectedness of cyber is what makes people fearful – an event can strike both globally and simultaneously.

But we’ve seen cases where this very interconnectedness has also helped mitigate damage. For instance, in the CrowdStrike incident, a solution was quickly shared across networks, reducing the impact. Even with malicious events such as NotPetya and Kaseya, we saw global efforts – the release of kill chains and decryptors – that helped contain the damage.

The ability to respond and mitigate risks globally and in real time offers an advantage in cyber compared to other catastrophic risks like hurricanes or earthquakes. This adaptability is helping the market become more comfortable with cyber risks, which is driving growth on both the insurance and reinsurance sides.