Howden, the insurance intermediary group, has released its fourth annual cyber report, “Risk, Resilience and Relevance,” noting market stabilisation last year due to improved cyber hygiene following a surge in ransomware claims in 2020 and 2021.
According to the report, carriers and brokers have made notable strides in enhancing price stability, coverage clarity, and the consistency of terms and conditions over recent years.
With this progress, two key opportunities arise to achieve Howden’s global premium projection of USD 43 billion by 2030, expanding beyond the US and catering to a wider client base among SMEs.
Sarah Neild, Head of Cyber Retail, UK, Howden, commented: “Favourable dynamics have persisted into 2024, with the cost of cyber insurance continuing to fall, despite ongoing attacks, heightened geopolitical instability and the proliferation of Gen AI.”
“At no other point has the market experienced the current mix of conditions: a heightened threat landscape combined with a stable insurance market underpinned by robust risk controls. The foundations for a mature cyber market, with innovation and exposure-led growth at its core, are now in place,” further added Neild.
Although the US currently dominates the cyber insurance market, comprising about two-thirds of the global share, sustained growth there is still crucial.
However, the report also indicates that more than half of the premium growth by 2030 is anticipated to come from outside the US.
In major European economies like Germany, France, Italy, and Spain, simply matching the penetration levels of more established markets could lead to a premium increase of around EUR 700 million.
Jean Bayon de La Tour, Head of Cyber, International, Howden, commented: “Cyber insurance is key to strengthening resilience around the world and insurers are now in a strong position to bring about real change.”
Bayon de La Tour further added that “this involves providing more capacity to meet pent up demand in currently underpenetrated regions, including Europe, Latin America and Asia, areas where Howden is investing strongly. The potential for growth is huge, particularly as most of these countries are coming off such a low base.”
The report highlights significant potential in the SME sector, which represents nearly half of the GDP in advanced economies.
As brokers and insurers develop more effective methods to engage this currently underserved demographic, substantial growth opportunities arise in the cyber market.
Shay Simkin, Global Head of Cyber, Howden, commented: “The full potential of cyber insurance can be unlocked by improving access to areas currently underserved by the market. Howden is spearheading these efforts by applying differentiated insights and expertise to deliver pioneering solutions.”
“Alongside major investment across our cyber operations, we have launched a platform that enables SMEs to buy up to USD 6 million of cyber cover in four simple steps, with just name, industry, revenue and website required to produce a quote. Innovation is key to growth, requiring a new approach to broking that is cycle- savvy, innovative, entrepreneurial, global and home to the sector’s strongest talent.”
According to Howden, strengthened cyber resilience is yielding dividends for policyholders as ransomware attacks resume their long-term upward trend. This year, attack frequency has risen by 18% compared to already elevated levels in 2023.
Despite this increase, the data reveals a nuanced severity landscape: recovery costs have rebounded after a temporary decline in 2022, yet fewer companies are compelled to pay ransoms, attributed largely to more effective risk management measures.
There remains ongoing concern within the market about systemic risk, particularly highlighted by recent events that underscore the risks associated with aggregation across multiple organisations through a single point of failure.
Analysis from recent years reveals that indirect claims from third parties have generally been lower compared to direct claims, indicating that for losses to pose a significant threat to the global market’s premium base, the scale or frequency of such events would need to surpass current levels by multiples.
Cyber insurance prospects are strong with a growing and diverse capital base. Sustained capital inflows are crucial as the market expands beyond current premium capacities to meet global business demands.
