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Cyber Insurance Losses Mount, But Industry Poised for Growth – Gallagher Re 2025

Posted on April 15, 2025April 15, 2025 By Martin Hinton

Gallagher Re’s latest report, The Quest for Growth, dives into a range of pressing cybersecurity insurance issues, from ransomware and cyber underwriting cycles to the evolving cyber threat landscape. At the center of it all lies a stark reality: the cyber insurance industry is struggling with volatility and major loss events, yet it holds vast, untapped growth potential. According to the report, rising losses have shaken capital confidence, pushing insurers to reassess their models. But Gallagher Re argues this isn’t a cause for retreat; it’s a call to act.

Losses Stack Up, But Demand Isn’t Going Anywhere

Despite multi-billion-dollar claims from events like NotPetya and ongoing ransomware surges, cyber insurance remains underpenetrated. In that case, damages amounted to $10B, insurance covered $3B, and cyber insurance only covered $300M. In the UK, only 6% of micro-businesses have cyber coverage. Gallagher Re calls this a missed opportunity. The report shows that even a catastrophic cyber event would likely increase demand, just as hurricanes fuel home insurance purchases; a clear indicator for cyber insurance growth.

Headline Cyber Insurance Losses (2013–2016)
Insurance Cycle Volatility Is Straining the Market

Unlike other insurance lines, cyber cycles are sharper and shorter. Peaks come fast, and downturns cut deep. This volatility stems from a lack of historical data and widespread uncertainty. When losses rise, insurers pull back, premiums spike, and innovation stalls.

Gallagher Re believes this boom-and-bust pattern is avoidable. Instead of cutting coverage post-loss, insurers should evolve strategies to manage systemic risk and maintain consistent capital.

Learning From the Past to Rebuild the Future

The report highlights lessons from past market corrections, including the 2001 post-9/11 hard market and the Class of 2005 reinsurers who thrived by leaning into chaos. Gallagher Re urges the cyber sector to adopt similar bold moves, keep writing coverage during downturns, even at higher prices, and deploy capital strategically.

Stagnation Is a Bigger Threat Than the Hackers

One startling trend? A slowdown in cyber product innovation. When profits come from rate hikes rather than new offerings, insurers lose the incentive to improve. Gallagher Re warns that this stagnation could deter clients, especially SMEs, who already question the value of their policies.

Capital Markets Could Unlock Growth

The report highlights the growing role of capital markets in cyber reinsurance. Gallagher Re’s 144a Cat Bond efforts show that outside capital can inject billions into the market, if structured correctly. The industry must build long-term partnerships to capitalize when the next hard market arrives.

Cyber Threats Are Evolving Too Fast for Complacency

AI-driven attacks, supply chain hacks, and data exfiltration are replacing traditional malware. The rise of tools like WormGPT lowers the skill barrier, letting anyone launch targeted, multilingual cyber attacks. Gallagher Re argues that static pricing and underwriting can’t keep up. Insurers must adapt with more innovative models and tech-driven solutions.

Sustainable Growth Demands Industry-Wide Coordination

The report ends on a hopeful note. Cyber insurance could become a multi-billion-dollar global market, if stakeholders act today. That means aligning capital, improving education, tailoring coverage, and adopting technology to manage risk and drive cyber insurance growth. If these moves are made during soft markets, the industry can emerge stronger, even when the next cyber catastrophe hits.

Finally, we explain it for the 5th graders: Think of cyber insurance like a medieval town with protective walls. Every time a dragon (read: hacker) attacks and burns half the village, town leaders argue whether to rebuild the walls higher or cheaper. Gallagher Re says, “How about both, but also train your guards, store more water, and don’t wait for the next fire!”

Other News: $50m in Growth Capital for CyberCube is Vote by PE for Risk Analytics as Key Driver in Cyber Insurance Industry(Opens in a new browser tab)

Martin Hinton

Martin Hinton is the Executive Editor and Publisher of Cyber Insurance News and Information. With over three decades of journalism experience across six continents, his work encompasses investigative reporting, documentaries, and coverage of cultural, political, and business news. To learn more about his career, click on his name to visit his LinkedIn page.


Cyber Insurance, Cyber Insurance Market Size, Cyber Insurance Reports Tags:capital markets, cyber insurance, Cyber Risk, Gallagher Re, NotPetya, Ransomware, underwriting cycle

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In this clip from our latest podcast episode, Dan Candee, CEO of Cork Protection, dives into a critical topic that hits close to home: Cybersecurity for Main Street businesses.

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Cybersecurity for Main Street: Dan Candee on Protecting Small Businesses | CEO of Cork Protection
SMB Cyber Threats - In this episode of the Cyber Insurance News Podcast, host Martin Hinton talks with Dan Candee, CEO of Cork Protection, about the rising tide of cyber threats targeting small and mid-sized businesses (SMBs). Dan shares his journey from Main Street entrepreneur to cybersecurity leader, offering real-world insight into the threat landscape, financial vulnerabilities, and how AI and managed service providers (MSPs) can help fortify business resilience.

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00:00 Introduction - Dan Candee and Cork Protection
02:27 The Importance of Cybersecurity for Small Businesses
05:29 Understanding Cyber Threats and Their Impact
08:26 The Role of Managed Service Providers in Cybersecurity
11:24 24Financial Protection and Cyber Insurance Solutions
14:01 Leveraging AI in Cybersecurity
16:53 Navigating Cyber Insurance Policies
19:56 Empowering Small Businesses with Knowledge
21:52 The Future of Cybersecurity and Community Resilience
26:05 MSP/ MSSP The Lingo decoded
29:05 Finals Thoughts and a bit of Hope!
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Cyberattack on Small Business: How AI Supercharges Cyber Threats | William Altman @CyberCube"
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