Global cyber insurance market predicted to reach £23bn GWP by 2027 – Morningstar DBRS

Cyber insurance is the fastest growing insurance business line in the last decade, with global gross written premiums (GWP) for this class predicted to reach $29bn (£23bn) by 2027, according to credit ratings agency Morningstar DBRS.

In a briefing note published today (26 June 2024), Morningstar DBRS estimated that global GWP for cyber insurance should reach nearly $40bn (£31.5bn) by the end of the decade as “the demand for cyber insurance has boomed”.

The agency attributed increased global appetite for cyber cover to the escalating frequency and sophistication of cyber attacks, which often lead to “additional potential financial repercussions”.

It explained: “In our view, stricter regulatory requirements to protect personal data, geopolitical tensions and the proliferation of state-sponsored attacks will also remain essential drivers of the global demand for cyber insurance.”

Regulation is an additional motivator for securing cyber insurance.

Morningstar DBRS stated: “We anticipate that this regulatory landscape will further increase demand for cyber insurance as organisations seek to ensure compliance and protect themselves against potential liabilities arising from data breaches.”

More market growth to come

The briefing note added that governments, financial institutions – such as insurance firms and banks – and healthcare organisations are cyber criminals’ top targets because of “the large amount of sensitive data they handle”.

Due to this increase in data usage and digital technologies, Morningstar DBRS predicted that “more comprehensive” cyber insurance policies will need to be created, fuelling further market growth globally.

As part of this, it noted that “insurers are increasingly considering risk management and cyber security best practices in an effort to help their policyholders enhance their cyber security posture”.

This includes, for example, actioning risk management services such as cyber security assessments and employee training to spot attacks like phishing.

The credit ratings agency concluded: “Technological advancements, changes in the regulatory landscape and the advent of innovative insurance products will shape the trajectory of the cyber insurance market.

“We also anticipate that insurers will persist in refining their underwriting models and pricing strategies to effectively underwrite cyber risk, thereby ensuring the market’s adaptability and resilience.”

• Insurance Times has calculated pound sterling amounts based on an exchange rate of $1.27 = £1, as of June 2024.