Cyber insurance premiums will grow “15% to 20% per year to a total of about $23 billion by the end of 2026, up from about $14 billion at the end of 2023,” estimates S&P Global Ratings report “Cyber Insurance Market Outlook 2025: Cycle Management Will Be Key To Sustaining Profits.” [Don’t tell Swiss Re, which just days ago asserted cyber insurance growth rates are dropping and projected cyber premiums will increase only 8% from 2024-5.]
Reinsurers
The report predicts cyber insurance market growth for reinsurers: “Cyber insurers use a significant amount of reinsurance, with primary insurers, on average, ceding around 56% of cyber insurance premiums to reinsurers in 2023…” It notes cyber reinsurers’ average net combined ratios have underperformed the primary market over recent years. “However, in 2023, strict underwriting and higher rate adjustments, compared to primary cyber insurers, helped reinsurers to achieve underwriting profitability in their cyber portfolios, with a net combined ratio of 89% for 2023, compared to 99% in 2022, and 104% in 2021…” This should continue, projects S&P, “leading to currently sustainable margins for cyber reinsurers.”
Bullish
Overall, S&P is bullish on cyber insurance market growth despite threats from systemic attacks and software failures, along with the increasing use of AI by cyber scammers. “The increased focus on advanced risk-selection technologies and claims management (including incident response and even specialized ransomware response teams) is helping to make the cyber insurance industry more sustainable and propelling its development. We consider the current margins to be sustainable and expect this will contribute to market development and the ongoing accrual of reserves for long-tail events.”
Other News: Russia arrests ransomware attacker Wazawaka.