Press Release

BOSTON, Sept. 4, 2018 — Catastrophe modeling firm AIR Worldwide (AIR) today announced that it is collaborating with Capsicum Re, a full-service global reinsurance broker, as part of a joint effort to enhance the insurance industry’s modeling of what many refer to as “silent” cyber incidents. Capsicum Re has also adopted AIR’s cyber risk modeling and analytics platform, ARC, which includes a wide range of cyber scenarios and models to help deliver sophisticated insights to its insurance portfolios. AIR Worldwide is a Verisk (Nasdaq:VRSK) business.


As part of the collaboration, the two firms will identify which non-cyber lines of business and industries are more likely to be exposed to silent cyber-related losses. The result of this collaboration is expected to yield the availability of models that simulate the impact of incidents that could cause silent cyber-related losses. AIR continually collects data on cyber risk to inform its cyber risk models, and the addition of Capsicum Re’s expertise is expected to result in models that provide unique insights for identifying and evaluating silent cyber exposures.

“Silent cyber exposure could exist in some insurance policies when cyber-related risks are not specifically included or excluded in the policy wording,” said Prashant Pai, vice president of cyber offerings at Verisk. “As a result, it’s possible the insurance industry could face higher-than-expected loss ratios when cyber incidents occur if certain cyber-related exposures are not necessarily accounted for during the underwriting process.”

“There’s a lot of uncertainty surrounding cyber risks, and these could result in losses for property, professional, marine, and other non-cyber lines of business,” said Scott Stransky, assistant vice president and director of emerging risks modeling at AIR. “The models we’re developing in collaboration with Capsicum Re can help the insurance industry assess and quantify silent cyber risks appropriately.”

“Given the rapidly evolving nature of cyber risk, it’s likely that insurance policy wordings will be challenged to keep up, and some forms of silent cyber exposures could always exist,” said Ian Newman, global head of cyber at Capsicum Re. “Our goal is to better advise insurers and reinsurers about the nature of cyber risk and help the industry develop innovative risk-transfer solutions that truly reflect the underlying risk exposure. We’re excited to work with AIR to improve our industry’s ability to understand and manage silent cyber risks.”

Justyna Pikinska, actuary at Capsicum Re, said, “Silent cyber is an area of growing concern, and the market is actively researching different ways to quantify it. It’s widely discussed by the actuarial community, and we see a significant uptick in requests for specialized models to be developed—both deterministic and stochastic. We have a great opportunity with AIR to develop a reliable probabilistic model to assess the volatility around the mean and quantify the probability of extreme cyber events.”

The silent cyber models are expected to be available in upcoming versions of ARC and through Capsicum Re’s broking service. AIR currently offers deterministic modeling capabilities for cyber risks, which are available within ARC. AIR has been offering probabilistic modeling capabilities for cyber through bespoke consulting services. Probabilistic modeling is expected to be built into the general availability (GA) version of ARC later this year.

About AIR Worldwide

AIR Worldwide (AIR) provides risk modeling solutions that make individuals, businesses, and society more resilient to extreme events. In 1987, AIR Worldwide founded the catastrophe modeling industry and today models the risk from natural catastrophes, terrorism, pandemics, casualty catastrophes, and cyber incidents. Insurance, reinsurance, financial, corporate, and government clients rely on AIR’s advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, longevity modeling, site-specific engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk (Nasdaq:VRSK) business, is headquartered in Boston, with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.

About Capsicum Re

Founded by Grahame Chilton and Rupert Swallow in 2013, Capsicum Reinsurance Brokers LLP Group (Capsicum Re) is a full-service global reinsurance broker, working in partnership with Gallagher as its primary treaty reinsurance broking outlet. Based out of offices in London, Bermuda, New York, Miami, Rio de Janeiro, São Paulo, and Santiago, Capsicum Re is focused on attracting the best advocates in the market to provide bespoke and specialist reinsurance advice and products; it boasts the foremost broking teams in the specialist areas that it focuses on, supported by market-leading analytical capabilities.


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