The growth potential for cyber insurance is “unparalleled” and could see global premiums exceed $US50 billion ($75 billion) by 2030, Howden says in a Coming of Age report. 

While growth has so far been driven by annual rate increases of more than 100% in first-half 2022, that gave way to flat renewals or even decreases of up to 10% in recent months. 

Cyber insurance dynamics have “shifted significantly” in the past year, Howden says, with a rapidly deteriorating loss environment, highly constrained capacity, rising demand globally and a major pricing correction giving way to stabilising market conditions off the back of “much improved underwriting results”. 

"The growth potential is huge: gross written premium (GWP) has more than doubled in five years,” Howden says. 

“Should current growth trends be maintained for the remainder of this decade, an ambitious but feasible scenario …. GWP could rival the scale of other major P&C lines of business such as D&O (Directors & Officers).”  

“Pricing has plateaued, or fallen in some territories, limits are increasing and competitive forces are yielding more tailored underwriting decision-making that reflects companies’ risk profiles.”  

Ransomware frequency in 2023 is up nearly 50% compared to the year-ago period, and average ransom payments in early 2023 were close to double those paid in 2022. However, this has not been accompanied by a corresponding rise in claims, indicating risk controls are making companies more resilient. 

"Conditions are now relenting, and buyers that have the correct risk controls in place are being rewarded with more favourable pricing and terms. This puts the market on a sound footing for growth,” the report said. 

"Despite the marked increase in ransomware activity so far in 2023, underwriting performance appears to be holding up relatively well. 

"The foundations for a more mature cyber market are now in place.”  

Australia placed eight on the list of ransomware victms by geography, with the US first, followed by UK, Germany, Canada, France, Italy and Spain. Globally, manufacturing was the most targeted industry, followed by professional, education, retail and health. 

Howden says pricing is unlikely to drive market expansion to the extent it did during 2020-2022, but by focusing on penetration, tail-risk management and reinsurance capacity the market can overcome potential growth limitations and secure long-term relevance. 

Cyber insurance “essentially remains a large corporate market,” it says, and more work especially needs to be done in engaging with smaller companies.  

On systemic risk, Howden says the ability of the cyber market to absorb economic losses of large-scale events will grow over time as it approaches the scale of other major P&C lines, and pricing is sustained “at levels commensurate with risks”.  

The cyber market remains the fastest growing area of insurance “by some distance,” with annualised growth of 30% over the last decade, compared with single-digit percentage range of the broader P&C commercial sector.  

“The pedigree is strong given how far the market has come in such a short space of time,” Howden said. “The cyber market is on the cusp of potentially transformational growth.”