Beazley forecasts cyber insurance market to grow to $40bn by 2030

Specialty insurer Beazley predicts 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, Beazley highlights that we are in an era of accelerating cyber risk, with the expected global cost of cybercrime reaching $23.84 trillion by 2027. Demand for cyber insurance is projected to nearly triple over the next six years, fuelling further market growth.

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.

While the US market is already relatively mature, analysts at Deutsche Bank suggest it is projected to 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.

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.

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.

You can see the structure of Beazley’s $1 billion of cyber reinsurance below:

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.

In fact, the firm has revealed that its 1-in-250 probable maximum loss from cyber has fallen to $461 million from $651 million at the end of 2023.

This website states: The content on this site is sourced from the internet. If there is any infringement, please contact us and we will handle it promptly.