Low uptake of cyber cover suggests insurers must do more to show businesses the product is essential, Gallagher Re says.

The reinsurance broker cites figures showing penetration rates for cyber are “still particularly low”, with only about 15% of UK SMEs having a policy, for example.  

“Cyber is an existential threat to small businesses,” it says in a new report. “Therefore, current market penetration indicates a failure of the insurance industry to bridge the gap between actual and perceived need for cyber insurance among SMEs.”

Fluctuations between hard and soft pricing “happen at an accelerated pace” in cyber, with sharper peaks and deeper troughs than other lines. Gallagher Re says a lack of long-term data and stakeholder confidence has contributed to this volatility, limiting new entrants and constraining capacity “just when the market is poised for growth”.

Sustainable growth depends on balancing supply and demand, securing capital that remains committed even during downturns, and underwriting strategies that “evolve rather than contract in response to loss”.

“By applying lessons from past cycles, the industry can develop cyber insurance into a more stable, scalable and profitable market – one that thrives despite short-term fluctuations,” Gallagher Re says.

See the report here.