Closing Cyber Risk with Beazley Insurance Consortium FLEX
In an increasingly complex risk landscape, financial institutions face a myriad of challenges that demand innovative insurance solutions.
Specialist insurer Beazley has risen to this challenge with the launch of its FLEX consortium, a comprehensive offering that promises to reshape the way financial institutions approach risk management.
The FLEX consortium represents a significant shift in the insurance industry's approach to financial institution coverage. By consolidating multiple risk areas into a single policy, Beazley aims to simplify the insurance process whilst providing robust protection against an ever-evolving threat landscape.
This comes at a crucial time when the insurance industry, particularly in the cyber sector, is grappling with unprecedented challenges and seeking new ways to remain resilient.
Comprehensive approach to risk
The FLEX consortium offers a wide-ranging solution for financial institutions worldwide, excluding those based in the US. This new offering addresses a broad spectrum of risks, including civil liability, crime, fraud, directors & officers (D&O) liability, and cyber threats.
Equally, Beazley’s Full Spectrum Cyber, which offers before, during and after cyber services and access to cutting edge cyber expertise from Beazley Security, is also available to clients.
By bringing these coverages under one umbrella, FLEX aims to mitigate the gaps in protection that can arise from managing separate policies.
"We have worked closely with our clients and brokers to create a solution that offers them the simplicity, efficiency and advanced protection they need to better manage complex and interconnected threats in one single policy.”
The consortium provides substantial coverage limits of up to €54m (US$50m) or US$50m, depending on client preference. This consolidated approach not only simplifies the insurance process but also ensures that financial institutions have comprehensive protection against a wide array of risks.
Clients can access FLEX through two primary channels: Lloyd's and Beazley's European insurance company paper.
Cyber security at the forefront
One of the most notable aspects of the FLEX consortium is its inclusion of cyber coverage. This comes at a time when the cyber insurance market is experiencing rapid growth, with Beazley itself claiming the top spot globally with a 6.68% market share and an estimated £827m (US$1.06bn) in gross written premiums for 2023.
"By bringing together our market leading cyber and financial institution experts, FLEX will actively reduce the risk of gaps in cover and build the resilience of our clients."
The inclusion of cyber coverage in FLEX is particularly significant given the current state of the cyber insurance industry.
The sector is experiencing record levels of attacks and unprecedented outages, making it a risky time for insurers.
Warren Buffett, the acclaimed investor, even advised Berkshire Hathaway's insurance agents to only sell cyber policies if absolutely necessary, citing concerns about the potential for costs to quickly aggregate.
Equally, major insurers Marsh McLennan and Zurich Insurance Group have recently called for government intervention to secure cyber risk, comparing the severity of some cyber attacks to terrorism and flooding.
A step towards sustainable cyber insurance
Despite these challenges, Beazley's inclusion of cyber coverage in the FLEX consortium demonstrates the industry's efforts to get a handle on the situation, for companies of various sizes.
By integrating cyber coverage with other financial institution risks, Beazley is potentially paving the way for a more sustainable approach to offering cyber insurance with fewer gaps in coverage.
The launch of FLEX aligns with Beazley's broader strategy to address evolving risks in the financial sector. Earlier this year, Beazley introduced Beazley Quantum, a cyber consortium aimed at large corporations with turnover exceeding US$1bn. This initiative infuses US$100m of new capacity into the cyber market and is accessible via the Global Wholesale platform through Lloyd's.
As the cyber threat landscape continues to evolve, with digital transformation and AI integration presenting new challenges, the insurance industry must adapt. The FLEX consortium represents a significant step in this direction, offering a comprehensive solution that addresses the acknowledges the nature of modern risks.
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