The speed at which cyber insurance has grown and continues to grow as a product has presented a range of issues for insurers. A lack of built-up knowledge around historical data, how to assess risk, and manage claims makes up some of the leading concerns around cyber insurance from industry insiders.
A GlobalData poll conducted across Verdict Media sites in Q4 2024 and Q1 2025 found that assessing risk accurately was the biggest concern among industry insiders in offering cyber insurance. This was followed by other issues that are clearly linked to it—such as a lack of historical data. The product has grown so quickly due to the rapid rise of digitalisation that it is very difficult for insurers to fully understand the level of risk they are exposing themselves to. It is also hard for them to limit risk as in theory all of their customers could be hacked in the same incident. This is unlike other lines, such as household, where insurers would limit the number of insured properties in high-risk areas. This also creates a difficult balance between trying to increase penetration rates and grow the product and trying to keep premiums down to attract customers as the level of risk continues to rise.
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Difficulties with assessing risk, managing claims, and a lack of reinsurance, combined with an ever-increasing threat of cyber-attacks, have led to premium prices increasing by around 20% year-on-year in recent times (according to the Association of British Insurers). At GlobalData, we forecast double-digit growth in the UK cyber insurance market up to 2028, with a high of 44.7% growth estimated for 2024. We have an estimated compound annual growth rate of 27.7% from 2023–2028.
This high level of growth, despite some uncertainty from insurers around managing and assessing risk, emphasizes the scale of demand within the market. It is continuing to grow despite some hesitancy from insurers and soaring premiums. It should get easier for insurers as they have more historical data to work with, but the level of risk will only rise as hackers become more sophisticated and businesses continue to operate primarily online. Insurers will struggle to reduce premiums due to the level of price, but as inflationary pressures ease, more businesses should be able to afford it. The challenge for insurers is to convince businesses of its value and potentially to tailor policies to perfectly fit a businesses’ needs.
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