Cyber Insurance Market Outlook 2024: Insights from OAC

Explore the latest insights on the cyber insurance market for 2024, including growth projections and key risk factors, as outlined by OAC experts

Despite anticipated growth in the cyber insurance sector for 2024, OAC, a leading actuarial consultancy within the Broadstone Group, forecasts a nuanced market outlook due to emerging concerns potentially leading to significant loss events and accumulation risks.

According to OAC’s Insurance Risk Monitor, 2023 witnessed unprecedented expansion in global cyber insurance business volumes. Munich Re analysts project a substantial surge in demand for cyber insurance over the next decade, with annual premium volume expected to increase by over 20% globally between 2019 and 2022. Moreover, S&P forecasts premium growth rates to soar as high as 25% annually.

The surge in demand spans various economic sectors, with heightened interest from industries handling personalized data, confidential information, electronic transactions, and online services. Providers of critical infrastructure seek insurance expertise to mitigate cyber risks effectively.

While the rating environment remains competitive, OAC’s non-life consulting team asserts that current rates are generally adequate for delivering underwriting profits. The introduction of exclusions for state-backed cyber-attacks on standalone policies in August 2022 prompted some business to migrate from Lloyd’s to other markets. However, this shift has not notably dampened overall premium volume increase, potentially improving rate adequacy.

Concerns over increased exposure to cyber risks stem from various factors, including advancements in AI technology empowering cyber-criminals, heightened geopolitical tensions leading to state-sponsored attacks, and the proliferation of connected devices amplifying the complexity of cyber security management.

Bharat Raj, Head of London Markets at OAC, emphasizes the importance of engagement with policyholders, coverholders, and cedants in ensuring strong underwriting performance. He highlights the role of actuaries and risk managers in navigating the evolving cyber risk landscape, emphasizing scenario analyses and actuarial deep dives as essential tools for understanding tail risk.

As the cyber insurance market continues to evolve, collaboration between insurers, policyholders, and risk management experts remains crucial in effectively mitigating cyber risks and sustaining underwriting profitability.

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Cyber Insurance Market Outlook 2024: Insights from OAC