Predicted 2034 US cyber insurance growth creates peak peril larger than Katrina: Structural change required to meet $100bn+ capital need

LONDON: 4th Sept 2024 - Cyber insurance is poised for exponential growth over the coming decade but it remains a capital-intensive peril that requires structural innovation, according to CyberCube, the world’s leading analytics provider to quantify cyber risk.

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.

Contact: Yvette Essen, Head of Content, Communications & Creative, yvettee@cybcube.com

About CyberCube 

CyberCube is the leading provider of software-as-a-service cyber risk analytics to quantify cyber risk in financial terms. Driven by data and informed by insight, we have harnessed the power of artificial intelligence to supplement our multi-disciplinary team. Our clients rely on our solutions to make informed decisions about managing and transferring cyber risks. We unpack complex cyber threats into clear, actionable strategies, translating cyber risk into financial impact on businesses, markets, and society as a whole.

The CyberCube platform was established in 2015 within Symantec and now operates as a standalone company. Our models are built on an unparalleled ecosystem of data and validated by extensive model calibration, internally and externally. CyberCube is the leader in cyber risk quantification for the insurance industry, serving over 100 insurance institutions globally. The company’s investors include Forgepoint Capital, HSCM Bermuda and Morgan Stanley Tactical Value. For more information, please visit www.cybcube.com or email info@cybcube.com.