Rapidly growing cyber market presents range of issues for insurers

The speed at which cyber insurance has grown and continues to grow as a product means insurers are cautious not to overexpose themselves in a particular risky line.

A lack of built-up knowledge around historical data, how to assess risk, and how to manage claims are some of the leading concerns around cyber insurance from industry insiders, according to GlobalData, a leading data and analytics company.

A GlobalData poll* conducted across Verdict Media sites in Q4 2024 and Q1 2025 found that assessing risk accurately was the biggest concern among industry insiders in offering cyber insurance. This was followed by other issues that are clearly linked to it—such as a lack of historical data. The product has grown so quickly due to the rapid rise of digitalization that it is very difficult for insurers to fully understand the level of risk they are exposing themselves to. It is also hard for them to limit risk, as in theory all of their customers could be hacked in the same incident.

Ben Carey-Evans, Senior Insurance Analyst, GlobalData, comments: “Cyber insurance is unlike other lines, such as household, where insurers would limit the number of insured properties in high-risk areas. This creates a difficult balance between trying to increase penetration rates and grow the product and trying to keep premiums down to attract customers as the level of risk continues to rise.”

Difficulties with assessing risk, managing claims, and a lack of reinsurance, combined with an ever-increasing threat of cyberattacks, have led to premium prices increasing by around 20% year-on-year in recent times, according to the Association of British Insurers.

According to GlobalData, the UK cyber insurance market is forecast to see double-digit growth up to 2028, with a high of 44.7% growth estimated for 2024. The market is estimated to register a compound annual growth rate (CAGR) of 27.7% during 2023-28.

Be Carey-Evans concludes: “This high level of growth, despite some uncertainty from insurers around managing and assessing risk, emphasizes the scale of demand within the market. It is continuing to grow despite some hesitancy from insurers and soaring premiums. It should get easier for insurers as they have more historical data to work with, but the level of risk will only rise as hackers become more sophisticated and businesses continue to operate primarily online.

“Insurers will struggle to reduce premiums due to the level of price, but as inflationary pressures ease, more businesses should be able to afford it. The challenge for insurers is to convince businesses of its value and potentially to tailor policies to perfectly fit businesses’ needs.”

*The poll was conducted globally with 105 participants