In a new report based on CyberCube’s cyber risk aggregation tool, Portfolio Manager, the mid-range projection suggests that the US standalone cyber insurance market could reach $45 bn in premium by 2034 — a five-fold increase from today.
Key findings from the report, “Projecting Cyber Insurance Growth: A 10-Year US Market Outlook”, include:
Rapid Growth Projections: Cyber insurance is projected to grow rapidly, driven by increasing digitization of the global economy and rising concerns about cyber risk. CyberCube has modeled three CAGR factors for the US insurance industry to 2034: 10% growth resulting in $17 bn of premium; 20% growth leading to $45 bn of premium and 30% growth creating $109 bn of US cyber premium. CyberCube’s US Industry Exposure Database (IED) pegs US standalone premium in 2023 at $8 bn.
Cyber as a Peak Peril: Cyber will become a peak peril, with the potential for losses from US Standalone Cyber to exceed Hurricane Katrina — the largest insurable natural catastrophe to date, costing the (re)insurance industry $102 bn in 2005. At 20% CAGR, the amount of capital required to manage a 1-in-250 year loss would be $121 bn.
Capital Requirements: The cyber (re)insurance market will need to substantially increase capital to enable this growth potential, with increases needed from multiple sources including insurers, reinsurers, capital markets, and potentially private-public partnerships.
Alex Tenenbaum, Director of Services and lead author of the report, said: “The cyber insurance market is set for outsized growth compared with other lines of P&C insurance over the coming 10 years. Structural changes are required to support sustainable growth. Some of these changes are starting to emerge and will require fuel to accelerate their growth - for example, penetration into the small business space and the emergence of the cyber Insurance-Linked Securities market. Some are still very much in their infancy and will require broader market collaboration to unlock, such as public-private partnerships that work for both sides.”
Rebecca Bole, Head of Industry Engagement, added: “The property & casualty (P&C) insurance sector stands at the threshold of a once-in-a-generation opportunity to build a sustainable market for cyber risk transfer. This enables societal resilience to one of the peak risks facing economies today.”
A copy of the report can be found here.
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