Cyber insurance sector showing signs of maturity

The cyber insurance market is evolving and showing early signs of maturity, as highlighted by recent research from Arctic Wolf. Brokers and carriers are assuming distinct yet interconnected roles to assist customers in obtaining policies. Brokers provide advice and arrange coverage, while carriers focus on evaluating and managing risk behind the scenes. Currently, only 47% of eligible organisations have a cyber insurance policy, indicating significant potential for market expansion. Adoption rates differ by region, with North America leading the market but exhibiting a lower coverage rate of 45%. In contrast, Europe shows higher adoption, with 50% of organisations in the U.K. and Ireland and 54% in the DACH region holding cyber insurance. Brokers are increasingly collaborating with cybersecurity providers, with 71% reporting partnerships and 94% offering proactive support through in-house services or connections to service providers.

The rise in cyber threats is anticipated to drive an increase in claims, with only 12% of insured organisations having made a claim in the past year. However, 70% of respondents expect claim numbers to rise, including 77% of brokers and 63% of carriers, who cite escalating threat activity as the primary cause. Cyber insurance rates are also on the rise, with 53% of insurers reporting increases over the past 12 months. Brokers noted a 57% increase, while carriers reported a 50% increase. Most rate hikes fall between 1% and 25%, with 44% of respondents indicating this range. Looking ahead, 72% of respondents expect premiums to continue rising, with 9% anticipating increases greater than 25%, driven by heightened cyber risk, more claims, and inflation. Denials for coverage are common, often linked to security gaps or financial issues, with inadequate or missing security controls accounting for 26% of denials. Financial instability and failure to provide required information each contribute to 21% of denials, with brokers more likely to cite financial instability as the leading cause.