According to Guy Carpenter, the US-domiciled cyber market currently stands at approximately $9 billion, with the non-US market totalling approximately $5 billion.
Guy Carpenter has released a new report on the cyber re/insurance market focused on the examination of the evolution of cyber as a core line of business. Along with this, the report also assesses the size and scope of the industry and provides a multi-vendor view of the potential scale of a global cyber industry loss.
‘Through the Looking Glass: Interrogating the Key Numbers Behind Today’s Cyber Market’ highlights how cyber coverage has expanded, shifted, and become more refined.
This data shows a significant increase in similar figures produced for the US market by Guy Carpenter and CyberCube in 2019, which put cyber premiums for the US market at $2.6 billion.
Due to the growth in global premiums, the footprint of where premium originates has also seen a change. The majority of global premium is still generated by US-focused carriers, the UK and European markets have seen accelerated growth.
Erica Davis, the Global Co-Head of Cyber at Guy Carpenter, said: “The improvements to data quality and nimbleness of the cyber models are instrumental in continuing to attract capital to the cyber market. As the models continue to evolve, reinsurance buyers and sellers will be able to hone in on what truly differentiates each portfolio and more accurately identify price and trade key catastrophe risk. As structures evolve to laser out catastrophe events, reinsurance buyers will have more choice in how they manage their portfolios and the diversity that arises from divergent buying strategies will expand the opportunities for capital to flow into the market, thus feeding its ongoing growth.”
The report also examines the possibility of a global industry event loss across three prominent cyber modelling platforms. To model the loss, Guy Carpenter leveraged its proprietary Cyber Data Lake which encompasses data relating to nearly 2 million cyber policies. The loss scenarios used spanned cloud, data theft and ransomware/malware events.
According to the study, the three platforms produced a modelled loss range of between $15.6 billion and $33.4 billion for a 1:200-year global loss event. For a 1:50-year event, the modelled loss range was between $5.5 billion and $24.4 billion. These variations are driven by scenario interpretation, different views of event footprints, and the analysis of historic data points.
Anthony Cordonnier, the Global Co-Head of Cyber, Guy Carpenter said, “There is no question that modelled losses from a significant cyber event would impact the market. However, given the industry’s resilience to significantly greater losses from other classes, in most cases these should not be insurmountable. Industry stakeholders recognize opportunities for continued growth and performance in this sector. As we contemplate what lies ahead, the focus must continue to be on further activating this valuable product category with commensurate traditional and alternative capacity.”
Interrogating the regional splits more deeply, the US segment constitutes approximately two-thirds of the global total loss, the reason for this is due to its broader market penetration and being closely aligned with the premium splits between territories.
The report noted that model variations were surprisingly greater at lower return periods – a factor attributed to a greater need to interrogate the takeaways from precedents and “counterfactuals” to drive better consensus.
