UK Cyber (Liability) Insurance Market Size

UK Cyber Insurance Market Analysis

The UK Cyber Insurance Market is expected to register a CAGR of 8% during the forecast period(2024-2029).

While the concept of insurance and its function of risk mitigation has remained the same over time, policies have had to adapt to stay relevant and accommodate the changing nature of risks. This includes insurance firms providing services throughout an insurance contract beyond solely paying out for claims as was traditionally the case. As a result of this evolution, several new forms of insurance have emerged—cyber insurance being one of them. Cyber risks have developed and gained increasing attention over the last 10−20 years, considering our increasing reliance on technology and connectivity. Cyber insurance caters to a spectrum of risks. At one end, there are higher-frequency, ‘daily life ’-type risks, such as data fraud, theft, or other privacy breaches. On the other end, there are ‘extreme scenario ’-type risks, such as NotPetya and Wannacry, which can result in severe disruption to many businesses. In the NotPetya attack, the virus froze the user’s computer and demanded a ransom to be paid. Businesses with strong trade links with Ukraine, such as the UK’s Reckitt Benckiser, Dutch delivery firm TNT, and Danish shipping giant Maersk, were affected. e WannaCry ransomware crypto-worm, which is estimated to have hit over 230,000 computers across at least 150 countries. The attack used a specific Microsoft Windows vulnerability to encrypt data and demand ransom payments. Among the range of sectors and industries hit, one of the largest agencies to suffer was the NHS, which was still largely reliant on outdated software and operating systems, making it vulnerable to attack.

Cyber insurance has and will continue to play an important role in the UK economy, both through the direct benefits to the UK business as well as the impact on the economy more broadly. Looking ahead, the cyber insurance market is expected to continue to undergo major development and rapid growth over the next few years, reflecting the increased awareness of risks as well as the likely increase in the frequency of cyber events driven by the broader trend of increasing digitization of businesses, which in part, were hastened by the COVID-19 pandemic. This poses challenges for data security as the quantity of data susceptible to cyber-crime increases. To tackle the challenges that arise from increasing connectivity, it is expected that coverage of cyber risks will continue to expand. To reflect this, the relevance and importance of cyber coverage in the overall functioning of the economy is expected to increase significantly.

The UK cyber insurers are adapting and improving their risk mitigation and containment processes (alongside UK cyber security firms). By sharing these techniques with businesses, UK cyber insurers can help to reduce the risks posed by cyber incidents. The complexity of cyber risks also means that reinsurance can play an important role in expanding the supply of cyber insurance.