1 June 2023News

Global cyber reinsurance market grows to $14bn

The US cyber re/insurance market has more than tripled in size since 2019, a new study from Guy Carpenter shows.

The report also warns that a once in 200 years cyber industry event could cost up to $33.4 billion, while a once in 50 year event could cost up to $24 billion.

The findings are contained in Carpenter's "Through the Looking Glass: Interrogating the Key Numbers Behind Today’s Cyber Market" report, which can be found here.

The report said the global re/insurance market is now estimated at $14 billion, with the US-domiciled market estimated at $9 billion and the rest of the world totalling approximately $5 billion. That compares with an estimate by Carpenter in 2019 which put cyber premiums for the US market alone at $2.6 billion.

The report noted that as global premiums grew, the footprint of where premium originated had also changed. Ransonmware also remains the largest segment of the market.

Guy Carpenter said: "While the majority of global premium is still generated by US-focused carriers, the UK and European markets have seen accelerated growth."

The report added: "At no time in the past has cyber had as much critical mass as it has now, and there are no signs of slowing down. Although penetration levels are still lower outside of the US and Europe, the class is growing in its global footprint.

"Over the next 10 years we are likely to see a greater convergence towards the more even split between the US and the rest of the world that we see in other classes."

Guy Carpenter said its modelling of a possible global industry event loss across three prominent cyber modelling platforms produced a modeled loss range of between $15.6 billion and $33.4 billion for a 1:200-year global loss event.

It added: "For a 1:50-year event, the modeled loss range was between $5.5 billion and $24.4 billion. These variations are driven by scenario interpretation, different views of event footprints, and the analysis of historic data points."

It said the US segment constituted approximately two thirds of the global total loss. This was due in large part to its broader market penetration and was closely aligned with the premium splits between territories.

The report noted that model variations were greater at lower return periods – a factor attributed to a greater need to interrogate the takeaways from precedents and “counterfactuals” to drive better consensus.

Anthony Cordonnier, Global Co-Head of Cyber, Guy Carpenter, said: "There is no question that modelled losses from a significant cyber event would impact the market. However, given the industry’s resilience to significantly greater losses from other classes, in most cases these should not be insurmountable. Industry stakeholders recognize opportunities for continued growth and performance in this sector.

"As we contemplate what lies ahead, the focus must continue to be on further activating this valuable product category with commensurate traditional and alternative capacity."