New European mutual launched to provide additional capacity for cyber risks

4 January 2023

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In December 2022, a new mutual insurer, MIRIS, announced that it had obtained its Insurance Operating Licence. MIRIS was first conceived in June 2021 and commenced operations as of 1 January 2023.

The objective of MIRIS is to provide additional cyber insurance capacity for its members, integrating and enhancing the capacity given by the insurance market.

Prospective members go through a screening process both for their financial strength and their cyber risk management capability. The MIRIS Board reviews the output of the screening process and decides whether to submit a membership application to the General Meeting of all members, which then decide whether to accept the new member.

All members pay an initial capitalisation and take part in the General Meeting at which they have one vote. MIRIS says that to ensure the continuing status as a mutual association, every member must maintain an insurance policy at all times during their membership.

During the first two years of operation, MIRIS says it will allocate up to EUR 25 million of capacity to each member, operating in coinsurance with the insurance market. The new mutual will also take the wording and pricing from the market. The minimum attachment point for MIRIS will be EUR 10 million.

Depending on the underwriting performance of MIRIS, the capacity granted is expected to increase to EUR 30 million in the third year.

Danny Van Welkenhuyzen, MIRIS CEO said: “Innovation of this level of importance in the insurance industry is unusual. The National Bank of Belgium, as the regulator, needs to verify all aspects rigorously – the suitability of the members, of the governance structure, the feasibility and solvability margins of the business plan. We have worked closely with them for many months to satisfy the stringent requirements appropriate to the projects. They have been a fantastic partner and we are delighted to have obtained the licence.”

Mark Pollard, Chief Operating Officer said: “Cyber risk is probably the fastest evolving risk the insurance market has ever needed to consider. In an industry where data and past experience shape the market response, this rapid evolution creates uncertainty, and consequently market volatility which challenges the risk transfer objectives of the policyholders. MIRIS aims to provide additional capacity, and in the longer term to help stabilise the market for its members. That depends on the members being exceptionally well-protected against the risks. MIRIS will have a role in promoting and validating excellence in cyber risk protection, as well as providing risk transfer capacity.”

Due to MIRIS being mutual association, it will collect an “annual contribution” and not a premium, although in practice, MIRIS says it works in the same way. The share of the risk taken by MIRIS will be priced at the same level as the market leader premium, but with a percentage discount.

MIRIS says the objective of the mutual is to provide capacity irrespective of the conventional market fluctuations. The business plan has been created on the basis of no inward reinsurance; however MIRIS is free to buy reinsurance if favourable opportunities arise.

MIRIS is a “not for profit” mutual association. Its underwriting surplus is put into a reserve account, where it will accumulate and be available to underpin the capacity granted to members.

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