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Strong demand for cyber coverage and rising SME adoption support a stable outlook –
AM Best has reaffirmed its stable outlook for the Global Cyber Insurance Market, citing persistent demand and solid growth drivers. This analysis is based on the newly released report, “Market Segment Outlook: Global Cyber Insurance.” The report notes “systemic risks from large-scale cyber incidents” are a persistent concern and that “AI-driven” cyberattacks can increase the size and complexity of attacks. It also notes, “the ongoing challenge of ransomware, business email compromise and funds transfer fraud continues to escalate.” That means the “potential for cascading losses across industries” exists. So…. stable BUT!
SMEs Drive Continued Market Expansion
Cyber insurance conditions have softened since 2023. However, AM Best sees continued potential for expansion. Small and medium-sized enterprises are increasingly adopting cyber coverage, driving sector growth.
The report highlights ongoing profitability despite rising competition. Heightened cyber risk awareness fuels demand for protective solutions.
Cyber Hygiene Helps Mitigate Losses
Robert Gabriel, AM Best senior financial analyst, said the market is driven by the growing need to manage evolving cyber threats. He noted, “Heightened awareness of cyber threats also has motivated insureds to strengthen their cyber hygiene, leading to more robust defenses and swifter incident responses, which in turn has helped to reduce potential losses.”
Capital and AI Technologies Bolster Market
Key factors supporting the stable outlook include:
- Strong capital support from reinsurers and alternative providers.
- AI-powered underwriting enables efficient risk selection.
- Tightening regulations, which push more firms to buy coverage.
Ongoing Threats Challenge Stability
The report warns about systemic risks from major cyber events. The interconnected nature of digital systems raises concerns over cascading losses. It also flags an increase in sophisticated attacks. Ransomware, email fraud, and fund transfer scams continue to be persistent threats.
Many of these elements were factors in the Marks & Spencer hack as related this week when their chairman testified before the UK Parliament.
Despite these challenges, AM Best expects the global cyber insurance market to remain profitable and well-capitalized over the intermediate term.
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