As we head into the new year, the future of the cyber (re)insurance market looks extremely promising. The pathway is being laid for the cyber market to reach half a trillion in coverage in the years ahead with growth expected from all avenues.
As the industry continues to learn about cyber risk and how to navigate it, it’s important to look forward and prepare for any trends we’re likely to see in the year ahead. CyberCube has compiled a list of cyber predictions for 2024 from our deep bench of experts, and I’ve summarised some of those trends in this blog.
The maturation of the cyber (re)insurance market is a strong theme in this report, and this is reflected in the team’s trends. They delve into topics such as the advancement of analytics and data quality, how Artificial Intelligence (AI) will affect cyber risk, as well as how the ILS market will play a crucial role in the expansion of the industry.
The pathway is being laid to create half a trillion of cyber coverage
Over the next 15 years, the cyber risk market will continue to grow. Catastrophe risk in the capital markets exceeds $100 billion and cyber has the potential to become just as large. The increasing reach of the Internet of Things will drive cyber premiums, as will the convergence of terror and cyber. It is critical that the market is ready for this growth and acts accordingly.
Additional reinsurers will enter the cyber reinsurance market in a meaningful way
Cyber is one of the fastest growing lines in insurance, and 2024 will undoubtedly reflect that with more reinsurers entering the market. This is due to an increase in cyber attacks and bigger cyber events occurring more frequently, as well as new tools allowing reinsurers to better understand cyber risk.
Market maturity and more advanced analytics will enable more robust risk management
As the market matures, the granular use of analytics to manage cyber risk will increase. This deeper understanding of cyber risk will foster innovation across the industry, enabling (re)insurers to offer a broader range of coverage options that match their own risk appetites and help them proactively address their portfolio of cyber risks.
The ILS sector will continue to evolve
As larger demands are made on the market, alternative risk transfer will become more important. In 2023, the Insurance-Linked Securities (ILS) market finally gathered momentum and we saw both the first private and public 144a cyber catastrophe bonds come to fruition. This has likely kickstarted a trend in 2024, and we anticipate seeing how other bonds in the market close and at what price — and how these developments shape the reinsurance and ILS landscape in 2024.
There will be a greater focus on data quality
Insurance companies are adopting the use of cyber risk analytics and evaluating their exposures more closely as the market continues to mature and grow. This has led to a greater focus on data quality, ensuring that they have confidence at the account level, portfolio level, and within predictive modeling.
The frequency of cyber attacks fueled by the proliferation of Artificial Intelligence will increase
Artificial Intelligence is here to stay, and we expect an increase in the frequency of cyber attacks that will impact loss ratios in the cyber insurance industry over the coming years. Because of this, organizations will be even more vulnerable to this onslaught of attacks and insurers need to be prepared.
The insurance sector will work more closely with SMEs as they increasingly come under attack
With cyber threat actors becoming better versed in targeting more vulnerable businesses, SMEs are at greater risk. These SMEs have much less knowledge of the intricacies of cyber security, and insurers will need to work more closely with these companies to mitigate risk, as well as review their own documentation regarding SME risk.
Cyber risk analytics will continue to encourage innovation
As we head into 2024, it’s critical for cyber (re)insurers to keep up with the maturing market. They must understand where they stand today, and what they need to do to better navigate cyber risk.
Greater knowledge of cyber is allowing for innovation within the space, meaning insurers can gain clarity when diving deeper into the unknowns of cyber risk. In 2024, a more mature approach involving cyber risk analytics, as well as paying attention to the above trends, will help create a robust cyber risk strategy.
If you would like to read the full predictions that CyberCube’s experts have made, download our free report and gain more insight into how we think the next year will unfold for cyber (re)insurance — Cyber Predictions Report 2024. You can also sign up to our webinar on Tuesday 13th February 2024 at 4pm GMT where our industry experts will discuss the next year’s trends — Cyber Predictions 2024 Webinar.