ILS instruments to cover a catastrophic cloud outage present a low–correlation, diversifying, and highly attractive insurance–linked investment opportunity, according to the MGA.
NEW YORK — February 16, 2023 — Parametrix, the leading provider of cloud downtime insurance, is working to bring to market Insurance–Linked Securities (ILS) transactions which would protect ceding re/insurers against a major sustained outage of “the cloud,” to which many re/insurers are exposed through their cyber portfolios.
“Significant accumulation of cloud outage risk is already on the books of many insurers and reinsurers. cyber insurance would become a much more attractive class of business if this potentially catastrophic accumulation risk were better managed,” said Yonatan Hatzor, co–founder and CEO of Parametrix. “We can do that through ILS structures.”
Dr. Rom Aviv of RHA Advisory, a senior advisor to Parametrix, said: “The structure will follow either the cloud downtime exposures within cedants’ underlying portfolios, or will refer to a peak–risk region which could lead to a significant loss. Correlation between cloud outages and the broader economy is low, so cloud downtime risk is potentially diversifying for investors. It features a well–defined trigger mechanism, short–tail, and a very limited risk of trapped capital or loss inflation.”
that this risk is not going to disappear. On the contrary. As such, we see the development of these ILS instruments as a vital element to support this growth,” concluded Hatzor.
Parametrix is a pioneer in the monitoring and modeling of cloud providers and cloud–based services. Our platform automates risk assessment, pricing, and modeling of these sophisticated platforms. Parametrix continuously monitors a variety of third–party IT services across the globe to collect granular data on service interruptions. We generate real–time alerts on outage events, and provide access to valuable data sets. As a Managing General Agent and Lloyd’s Coverholder, Parametrix underwrites parametric insurance against outages of the cloud, CDNs, or e–commerce platforms, backed by major A–rated global insurers. Parametrix operates from offices in New York, Tel Aviv, London, and Munich.