Specialty insurer, Beazley, has predicted that the cyber insurance market will grow from $15 billion in 2024 to $40 billion by 2030, driven by increasing demand due to rising cyber threats and costs, as the firm continues to manage its exposure amid premium growth.
In its latest Cyber Risk Update, the risk underwriting firm highlights that the global community is in an era of accelerating cyber risk, with the expected global cost of cybercrime reaching $23.84 trillion by 2027.
This is even as projected that demand for cyber insurance would nearly triple over the next six years, fuelling further market growth.
A news report from Reinsurance News, an online industry-focused online medium on the latest report by Beazley indicated that the firm anticipated that at the same time, demand for cybersecurity services is also expected to rise, forming a vital part of Beazley’s offerings. CrowdStrike is identified as another factor driving this demand.
Although the US market is already relatively mature, analysts at Deutsche Bank were quoted as suggesting that it would account for about 50% of growth, particularly as more mid-sized and small businesses adopt cyber insurance. Europe is also expected to experience strong growth from a lower starting point compared to the US.
The online news medium recalled that Beazley entered the cyber space around 15 years ago, and boasts a 10% share of the global cyber market, and now has 260 team members focused on cyber, 136 in underwriting and 124 in cyber services.
It further clarified: “Given the insurer’s prominence in the cyber marketplace, the firm adopts a diverse and carefully managed approach to underwriting the risk. This includes the active management of line size, of which 99% of policies written by the firm have a line size of less than $10 million, with an average line size of $1.9 million.
“Beazley’s cyber portfolio is diversified by industry and geography, which along with risk management actions like pre-emptive threat awareness, pro-active policy wording adjustments, and a lead role in claims handling, has positioned the firm well to capitalise on growth.
“As the insurer’s cyber portfolio has expanded, so too has its use of reinsurance protection, which now includes three full 144a cyber catastrophe bonds. The $140 million PoleStar Re Ltd. (Series 2024-1) and $160 million PoleStar Re Ltd. (Series 2024-2) transactions both attach after $500 million of applicable losses, and sit above the retention and $200 million of traditional excess of loss cover. Together, these two cat bonds provide $300 million of capital markets-backed cyber reinsurance for the firm.
“Above these, so attaching at $800 million, is the $210 million PoleStar Re Ltd. (Series 2024-3) deal, the largest cyber cat bond so far, which takes Beazley’s cyber cat bond protection to $510 million. Additionally, it was revealed yesterday at a company presentation, that Beazley has also secured a $290 million cyber industry loss warranty (ILW). Beazley also has cyber quota share reinsurance coverage.
“While Beazley’s cyber premiums continue to grow, approaching $1.4 billion in 2023, the exposure remains managed thanks to its underwriting approach and comprehensive cyber reinsurance coverage”, it added.
Reinsurance News further noted that in fact, the firm revealed that its 1-in-250 probable maximum loss from cyber had fallen to $461 million from $651 million at the end of 2023.
