Market Overview

Guidewire Contributes to Report That Finds Top Cyber Insurance Providers Could Lose up to 119% of Policyholder Surplus in 2022 Cyber Catastrophe Event


Report by A.M. Best with software modeling from Guidewire Cyence™
Risk Analytics highlights opportunity for insurance providers to
leverage cyber risk management tools to counter potential financial

Guidewire Software, Inc. (NYSE:GWRE), provider of the industry platform
Property and Casualty (P&C) insurers rely upon, helped develop data
analysis included in a report published by A.M. Best, "Cyber Insurance
Market: Stress Testing the Future." The report extrapolates market
trends to test and estimate the impact of future cyberattacks on the
industry's capitalization and ratings. Cyber insurance market premiums
globally are on pace to grow to $14 billion by 2022, and the report's
goal was to provide clarity on the potential impacts of this growth on
insurers, and to provide risk management guidance to support the market.

In the test, five typical policy profiles were created, each with
specific attributes such as policy limits and line of business minimums.
Guidewire Cyence™ Risk Analytics, which uses data listening to collect
real exposure and accumulation data at scale, was applied to the modeled
cyber portfolios of the top 20 insurance carriers to model their gross
loss potential in two scenarios – cloud service provider interruption
and mass vulnerability as described in a Lloyd's
2017 emerging risk report.

In the first scenario, numerous cloud-based customer servers fail,
leading to widespread service and business interruptions. In the second,
a common software application is compromised and exploited on a global
scale. To capture the totality of potential losses, Guidewire also
modeled the portfolio's total annual losses from all event types.

According to the A.M. Best special report, most carriers' gross losses
were manageable, however severity loss potential was identified. Three
of the carriers' modeled gross losses range from 15 percent to 119
percent of their estimated 2022 policyholder surplus in a single-event
scenario. In addition to the two event scenarios, annual gross losses
that could occur over a 12-month period as a result of all events, were
assessed. At the 1-in-200 event level, five companies incurred gross
losses ranging from 11 percent to 233 percent of their 2022 policyholder
surplus. The report notes that loss projections under the 1-in-50 and
1-in-200 scenarios do not consider ceded reinsurance arrangements the
companies may have.

"It's clear cyber is a major growth opportunity for the P&C insurance
industry, but it's also challenging," said George Ng, Chief Data
Officer, Guidewire. "Advanced analytics and risk modeling are imperative
for effective underwriting, pricing, and accumulation to ultimately
drive a sustainable cyber insurance marketplace."

To access the full copy of this special report, please visit.

About Guidewire Software

Guidewire delivers the industry platform that Property and Casualty
(P&C) insurers rely upon to adapt and succeed in a time of accelerating
change. We provide the software, services, and partner ecosystem to
enable our customers to run, differentiate, and grow their business. We
are privileged to serve more than 350 companies in 32 countries. For
more information, please visit
and follow us on twitter: @Guidewire_PandC.

NOTE: For information about Guidewire's trademarks, visit

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