Marine Cyber Endorsement
19/11/2021
Marine Cyber Endorsement
Dear Partners,
As you have no doubt experienced in your various policies, the past couple of years have seen many changes in the availability of reinsurance capacity and the current market environment indicates that the trend will continue in 2022.
The Sulphur2020 and Cyber2021 Regulations have come into force and with them a number of connected, and sizeable, casualties. The same goes for the Covid 19 outbreak, which led to the insertion of ad hoc exclusion clauses in all (re)insurance contracts.
For 2022, all reinsurance contracts will have to include an exclusion clause for cyber-risks’. The reason for
the latter is the fact that the market regulators impose an apportionment and separate reporting of “cyber-premium” to facilitate forecasting of claims and monitoring the long-term sustainability and development of the segment (i.e. cyber risks will need to be catered for under a separate / specialist policy).
The Cyber Exclusion Clause is already in place in most contracts, but not Nordic Marine’s (we have until now managed to be the exception to the rule for the benefit of our clients). With effect from 01/01/2022, however, we will need to be consistent with the standard market practice and include the Lloyd’s Market “Marine Cyber Endorsement” in all policies.
From an underwriting perspective, our view remains that for ship owners (and ship related perils) the nature of cyber-risks is not as severe a risk in the context of our delay cover as for other segments.
Shoreside perils are certainly a higher risk, in particular for certain segments like container carriers or ferries. Essentially, whilst cyber-risk is a real risk for both, the single event risk for ship related perils is higher in intensity, while for the shore related perils it is higher in frequency.
Our reinsurers are onboard with our appreciation and evaluation of the risks,
The good news is, we are in the process of finalizing our reinsurance arrangements and we expect to be in a position to provide our clients the option to buy back the exclusion up to an individually agreed annual aggregate cyber-claims sub-limit. Understandably, the buyback option will entail inevitable administrative reporting and other procedures, which will generate additional admin work and costs.
Based on our analysis and the overall reinsurance costs for cyber-events, and in line with our “one size fits
one” values, we will adopt a “single client” approach and jointly assess the realistic need for cyber-risks to
remain included, or not.
"If you have any queries on this evolution, please contact your usual contact(s)."
At the time of issuing this notice the final details of our 2022 reinsurance programme have not yet been formally finalised.
Dan Lennhammer, Managing Director
For full details of our product range and how our team can help you, please contact us : insurance@nmip.se