Howden Finds Cyber Market Stabilising, Rates Declining

Howden’s fourth annual cyber report has found a market stabilisation following significant volatility in 2020 and 2021. The “Risk, Resilience, and Relevance” report found a 15% decrease in rates from their peak in 2022.

The fall in rates comes despite an 18% increase in ransomware attacks last year. The report cites improved cyber hygiene within businesses as the primary reason for the decline in rates.

Insurance premiums rose substantially in 2021 and 2022 as the pandemic forced companies to accelerate their transitions to remote work without putting in adequate protections. This allowed malicious actors to exploit network vulnerabilities that resulted from the use of personal devices, increased access points, and the loss of centralised data controls, leading to more claims.

Since 2022, there has been increased awareness of good practices such as multi-factor authentication, EDR, and cloud backups.

Sarah Neild, Head of Cyber Retail UK Howden, commented: “Favourable dynamics have persisted into 2024, with the cost of cyber insurance continuing to fall despite ongoing attacks, heightened geopolitical instability, and the proliferation of Generative AI.

“At no other point has the market experienced the current mix of conditions: a heightened threat landscape combined with a stable insurance market underpinned by robust risk controls. The foundations for a mature cyber market, with innovation and exposure-led growth at its core, are now in place,” Neild added.

Howden also found that carriers and brokers have improved price stability, coverage clarity, and consistency of terms and conditions in recent years. Howden predicts a projected global premium of US$43 billion by 2030, with significant growth expected to stem from expanding beyond the US and through serving more SMEs.

The US dominates cyber insurance, currently accounting for about two-thirds of the global market. However, Howden’s research expects more than half of premium growth up to 2030 to come from non-US territories. In Europe, particularly Germany, Italy, France, and Spain, the growth in the market is expected to be especially significant.

Jean Bayon de La Tour, Head of International Cyber at Howden, said: “Cyber insurance is key to strengthening resilience around the world, and insurers are now in a strong position to bring about real change. This involves providing more capacity to meet pent-up demand in currently underpenetrated regions, including Europe, Latin America, and Asia, areas where Howden is investing strongly. The potential for growth is huge, particularly as most of these countries are coming off such a low base.”

Meanwhile, the SME sector, which makes up nearly half of gross domestic product in advanced economies, also presents a significant opportunity, according to World Economic Forum research. Brokers and insurers are said to be finding better ways to serve this currently underserved demographic.

Shay Simkin, Global Head of Cyber at Howden, stated: “The full potential of cyber insurance can be unlocked by improving access to areas currently underserved by the market. Howden is spearheading these efforts by applying differentiated insights and expertise to deliver pioneering solutions.”