£38 Billion Growth Predicted for UK Cyber Insurance Market by 2030

International insurance broker Howden has released its annual report on the cyber insurance industry, indicating that the market could expand to £38 billion ($50 billion) by 2030. The report highlights the significant growth driven by rising prices, a consequence of the surge in ransomware claims in 2020 and 2021.

Consequently, the cost of cyber insurance more than doubled during this period, however conditions did begin to stabilise, with decreased activity and enhanced risk controls mitigating cyber-attacks. Additionally, the market shows promising developments in 2023, including improved underwriting performance and resurgent ransomware activity as ransomware attacks have increased by nearly 50% in 2023 compared to the same period last year.

Addressing Challenges and Expanding the Cyber Insurance Market

The cyber market has outpaced other areas of insurance with an average growth rate of 30% over the last decade compared to single-digit growth in the broader property and casualty commercial sector.

According to the report to fully realise its potential, the cyber insurance market must expand beyond existing premium pools by catering to the needs of large buyers. In Europe, reduced limits and higher retention have compelled some major buyers to explore solutions. The report goes on to say that increased penetration in underdeveloped territories and demographics is essential. While cyber risk awareness is on the rise across the board, and mid-sized companies are showing improved uptake, it remains predominantly a market for large corporations. Bridging these gaps will drive further growth and expansion in the cyber insurance market.

Hackers’ tactics continue to evolve, necessitating a proactive approach in cyber insurance. In addition to double or triple extortion, where hackers threaten to publish stolen data or launch distributed denial-of-service attacks, certain groups are now tampering with or destroying data before demanding ransoms for information on the targeted assets. Physical threats towards company executives and their families are also on the rise to increase pressure during negotiations. Analysing past attacks and threat intelligence allows insurers to identify vulnerable companies, emphasising the importance of addressing security weaknesses before engaging with insurance partners.

Systemic cyber exposures pose challenges to the cyber insurance market, which traditionally focuses on underwriting geographically contained and uncorrelated risks. The issue of systemic losses has gained prominence, particularly in light of the ongoing war in Ukraine. Cyber incidents such as WannaCry, NotPetya, SolarWinds, and others have underscored the potential for significant losses and the need to manage borderless and nonphysical threats. As the cyber insurance market grows, it will gradually build the capacity to absorb economic losses associated with large-scale events, driven by innovation, increased competition, and higher limits.

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