Cyber-related risks are now firmly at the top of the boardroom agenda. Indeed, a 2021 survey of Directors and Officers Liability produced by Clyde & Co, in conjunction with Marsh, reports that cyber attack and data loss have been the two highest-rated board-level risks in each of the last 3 years.
Add the current hard commercial insurance market into the mix, and it is little wonder that captive solutions are now front and centre in the conversations around how best to manage cyber risks.
The Isle of Man captive industry is renowned for being nimble and this, aligned with its internationally recognized, gold-standard regulation, helps to make it the ideal jurisdiction for working through the constantly evolving risk management conundrum surrounding data security and malicious cyber attack.
Of course, the traditional value-add of the captive solution remains relevant for this type of risk, including:
- enhanced claims control and management
- capital and cost-efficiency
- bespoke policy wording capability
- access to the specialist re-insurance management
- improved organizational risk management.
Looking forward, the Isle of Man is in the final stages of preparation for the introduction of a new capital and solvency treatment for single-parent captives.
This is the result of a long-term project which, firstly, sought a precise definition of “captive insurance” and, then, has overlaid that with a new corporate governance code that streamlines risk management, capital and solvency obligations in a way that is truly proportionate to the activities of single-parent captive insurance companies.
This will be introduced at the end of 2021 and will change the landscape for how existing and potential captive owners can benefit from captive solutions. Cyber risk, which is generally organization-specific, will a key beneficiary of this new regulatory standard.
It is difficult to envisage cyber risk dropping down the board agenda any time soon, if ever, and the market seems to predict challenging commercial rates for a while yet. So, we can expect the demand for captive solutions to be buoyant for the foreseeable future and Chief Risk Officers would do well to see what the Isle of Man has to offer.
Learn more about the benefits of the Isle of Man's captive insurance ecosystem.