Cyber Insurance Market Growth Driven by Regulatory Changes and Rising Geopolitical Tensions

Morningstar DBRS published a commentary discussing the opportunities and challenges of the global cyber insurance market, as well as its growth prospects until the end of the decade.

Key highlights include the following:

-- We expect cyber to remain the fastest-growing insurance business line for the rest of the decade.

-- Regulatory requirements to improve cyber defenses and protect sensitive personal data are increasing the potential costs associated with cyber-attacks, prompting additional demand of cyber insurance products.

-- Cyber insurance demand is also being fueled by rising geopolitical tensions and the proliferation of state-proxy attacks that can be misidentified as common criminal activity and covered under existing policies.

“With businesses and individuals becoming more reliant on digital technologies, the demand for cyber insurance has boomed. We expect global cyber insurance premiums to reach almost $40 billion by the end of the decade,” said Marcos Alvarez, Managing Director. “However, insurance and reinsurance companies face several potential challenges in the cyber insurance market, including risk quantification and pricing, accumulation modelling, state-sponsored activity, a changing regulatory landscape, and relatively low penetration rates, particularly among small and medium enterprises.”