The global cyber insurance market, worth US$15.7bn in 2023, is experiencing rapid growth and fragmentation, reflecting the rising digital threats and competitive dynamics.
As a result of the significant changes, insurance is expanding beyond its traditional stronghold in the United States. According to Insuramore, a marketing services provider specialising in the insurance sector, nearly 300 insurer groups were underwriting cyber risks by the end of 2023. This trend is highlighted by the decreasing market share of the top players. In 2023, the top 20 groups accounted for 64.9% of global premiums, down from 70.3% in 2022. This shift indicates a growing presence of smaller insurers entering the market, making it increasingly competitive.
US Market Dominance
Despite the fragmentation, the US continues to dominate the cyber insurance market. Insuramore’s data shows that US-based underwriters, including those operating in Bermuda and at Lloyd’s of London, accounted for over half of the global market. However, the landscape is changing as the business expands more rapidly outside the US. Premium rates in the US have shown a tendency to decline recently, prompting insurers to explore and invest in international markets.
Market Leaders
Beazley leads the global market with over US$1bn in gross direct premiums written (GDPW) in 2023, followed by major players such as Chubb, Munich Re, AXA, and Fairfax Financial Holdings. Insuramore’s analysis also highlights the presence of over 400 managing general agents (MGAs), managing general underwriters (MGUs), and cover-holder enterprises globally. These entities, like At-Bay, CFC Group, and Coalition, contribute significantly to the market’s diversity by writing cyber insurance on a delegated underwriting authority basis.
Challenges and Opportunities Ahead
Predicting the future trajectory of the cyber insurance market remains complex due to various influencing factors. The global outage incident on 19th July 2024 serves as a stark reminder of the unpredictable nature of digital threats. The implications of such events will unfold in the coming months, influencing premium rates and underwriting strategies. Despite these challenges, the market’s expansion outside the US presents new opportunities for growth and innovation.
The changing cyber insurance landscape has significant implications for businesses and insurers alike. As digital threats become more sophisticated, the demand for comprehensive cyber insurance policies continues to rise. Insurers must adapt to the increasing complexity of cyber risks and develop robust underwriting models to stay competitive. For businesses, this means carefully evaluating their cyber risk exposures and selecting appropriate coverage to mitigate potential financial losses.
**************
Make sure you check out the latest industry news and insights at InsurTech Digital and also sign up to our global conference series – FinTech LIVE 2024
**************
