Cyber Attack Insurance Risks

To place and price today’s most complex risks, the industry must reimagine how ventures are built, and who builds them

By Bryony Garlick

Systemic risks are pushing the boundaries of insurability, and, in many cases, outpacing traditional underwriting models. From extreme weather and cyberattacks to geopolitical shocks and supply chain collapse, the risk landscape is increasingly interconnected. For Toby Harvey-Scholes, head of consulting at Ninety Innovation, addressing these challenges means rethinking not just insurance products, but the very shape of the ventures that deliver them.

“If you’re tackling something entirely new, it inevitably requires capabilities your business doesn’t have,” he said. “That’s where partners come in.”

Rethinking market structures

Legacy models still dominate much of the industry, built on segmentation by geography, peril, or product line. But as Harvey-Scholes points out, that structure no longer fits today’s challenges.

“Segmenting risk helps manage it. In reality, we’re just pushing risk around. No-one truly owns it.”

The result is grey areas where coverage is unclear. “A catastrophic cyberattack might halt business operations, but is that covered under BI, cyber, or something else?” he said. “These gaps exist because of segmentation.”

He argues that insurers need to move toward cross-line modelling and shared-risk pooling to address risks that fall between or across traditional boundaries. That shift has implications for every actor in the ecosystem, including carriers, reinsurers, capital providers, and distribution partners.

Mission-led innovation meets structural complexity

New insurance ventures, Harvey-Scholes argues, must begin with a clear mission.

“We’re seeing a shift toward problem-led and mission-led innovation,” he said. “Historically, insurers were there to support people at their greatest point of need. There’s a growing return to purpose.”

That’s especially true in Europe, where global insurers like AXA are embedding social and environmental goals into new offerings. Still, alignment remains a challenge. “Prevention often benefits one party while the cost sits with another,” he said. That structural misalignment complicates systemic-risk solutions.

Collaborative ventures offer one path forward. But they require careful design. “You have to quickly understand who brings what to the table,” he said. “Without that clarity, you can’t move forward.”

The capital question

Systemic risk isn’t just hard to model, it’s hard to fund. “Insurance is based on historical data,” Harvey-Scholes said. “That just doesn’t work anymore.”

Firms like BlackRock have turned to synthetic datasets to forecast risk. Insurers are starting to do the same. But modelling alone doesn’t solve the capacity issue. “In Australia, around 25% of property is now uninsurable,” he said. “In the US, markets have been loss-making for years.”

To stay in the market, carriers are tapping alternative capital. Everest, for example, enables private investors to access diversified reinsurance risk. Beazley has created a £140 million cyber cat bond facility. “These structures open vast new capital pools,” he said. “It’s how we build resilience for systemic risk.”

Focused ventures, flexible roles

The next wave of insurance ventures won’t replicate the giants of today. Harvey-Scholes predicts leaner, partnership-driven entities that focus narrowly on a single innovation and rely on external relationships for everything else.

“They won’t try to build massive operational structures,” he said. “They’ll focus on what they do uniquely well, and plug into reinsurers, data firms, and distribution networks.”

That evolution will affect every link in the chain. Underwriters, brokers, investors, and service providers will need to understand who owns the risk, who holds the capital, and how value is shared.

While some carriers are retreating from innovation, others are doubling down. AXA and Munich Re have scaled back their venture arms, while Liberty Mutual and Prudential are increasing strategic investments. “Fewer players are innovating,” Harvey-Scholes said, “but those that are, are doing it with much greater intensity.”

Partners must evolve to meet system-wide risk

Ultimately, Harvey-Scholes sees a shared responsibility across the industry, from carriers and reinsurers to brokers, technologists, and capital providers. Systemic risks can’t be solved in isolation, and tomorrow’s ventures will depend on tightly aligned partnerships to succeed.

“To truly address interconnected risks, we need models, and mindsets, that allow for longer horizons, shared balance sheets, and collective ownership of both risk and reward,” he said.

For those looking to play a valuable role in that future, whether as brokers, underwriters, investors or innovation partners, the challenge is clear: move beyond transactional thinking and help build solutions that reflect the complexity of the risks themselves.

Those who do will not only stay relevant – but they’ll also help shape a more resilient insurance ecosystem.

Source: Insurance Business