TMK signals Asia Pac growth in cyber property, marine hull

With Asia Pacific’s cyber insurance market becoming increasingly crowded, Tokio Marine Kiln (TMK) is looking to stand out with a new property damage product. At the same time, the specialty insurer is also bolstering its marine business with new hull cover.

“The past three years have been about building capabilities in the business, regardless of market conditions, so that we can take advantage of opportunities as they arise,” Pavlos Spyropoulos, TMK’s Regional Managing Director for Asia Pacific, tells (Re)in Asia. “At the start of the year, we felt we were in a good position to drive some growth in new lines of business.”

Insuring property against physical damage caused by cyberattacks is one way the Lloyd’s player hopes to win new business.

“We continuously look at how we can develop our existing pool of business, but we also want to differentiate ourselves and bring something new to the market. Insurance against property damage arising from cyber attacks is something that we can take the lead in,” Spyropoulos says.

TMK has been actively promoting this kind of cyber product in Europe, where it is growing in popularity. Spyropoulos is hoping that clients in APAC will now start to show similar interest in protecting physical assets that could be damaged as a result of a cyber attack. This includes buildings, machinery and stock.

For instance, cyber criminals might interfere with the operations of a factory, leading to widespread disruption of the manufacturing process. Another possibility is that they take control of a ship and drive it into a port.

“Cyber is typically excluded from property insurance in APAC markets, so we are giving clients the opportunity to add this back in.”

Pavlos Spyropoulos

Tokio Marine Kiln’s Asia Pacific Regional Managing Director

In Europe, a high-profile cyberattack on Jaguar Land Rover has focused everyone’s attention on the damage that such incidents can cause. The British automotive manufacturer had to suspend operations for more than a month following the attack, causing estimated losses of £50 million ($66 million) a week.

While an attack on such a scale has not yet happened in APAC, the size of the region’s manufacturing base means that the market presents a compelling opportunity for TMK.

“We are seeing quite a bit of growth in the market for first-party coverage,” says Spyropoulos. “Cyber is typically excluded from property insurance in APAC markets, so we are giving clients the opportunity to add this back in. We’re trying to go beyond what is already available.”

TMK already has a strong position in APAC’s property market. Spyropoulos says that this presents a great opportunity for cross-selling.

“We’ve got very good relationships with property brokers in the region, and they have shown significant interest in our cyber capabilities,” says Spyropoulos. “This makes us optimistic that this product will be widely understood by the market.”

Strengthening marine

TMK also identified marine as an area to focus on.

While the insurer has been underwriting cargo cover in the region for years, it has so far stayed away from hull.

This changed in October, when TMK decided to back the launch of Rokstone Underwriting’s MGA business in Singapore with 100% capacity, to the tune of $25 million. Rokstone underwrites all the major marine risks: construction, cargo, hull, and liabilities.

“We identified marine as an area where we had great potential to develop. We’re a very strong and highly diversified player in property and aviation. We felt it made sense to have broader lines of business in marine as well,” says Spyropoulos.

This thinking is partly influenced by the significant growth in inter-regional trade as supply chains diversify. However, this is also causing a shift in risk profiles.

“Given the current macro indicators on how marine in Asia is going to grow, this is not something we can ignore,” says Spyropoulos. “At the same time, there is a sense that marine underwriters need to work very closely with brokers to understand how the risk profiles of their insureds are changing and shifting.”

Spyropoulos says that rapidly changing trade patterns are creating short-term ripples. However, from a long-term perspective, the fundamentals still remain the same.

“Trade flows might change, routes might change, volumes might go up and down, but long term there will be an increase in Asian marine insurance,” says Spyropoulos. “Having the right people in place who can understand market needs and respond to this changing environment is very, very important.”