In its newest US Cyber Market Update, Aon questioned whether the cyber insurance industry is on track to meet often-cited growth projections.
While acknowledging that previous annual growth rates would be difficult to sustain, US cyber premiums grew to just over $2 billion in 2018, a 10 percent increase from the prior year, Aon said in the report. The industry experienced annual growth rates in excess of 30 percent in 2016 and 2017.
Double-digit growth may not be bad, but Aon pointed out that in order to reach global cyber premium projections of $14 billion by 2022 and $20 billion by 2025, premiums need to increase annually by 20-26 percent for the next three to six years if the current market size is about $4.5 billion.
“The main cyber story of the 2018 financial year is arguably that there was a lack of a story. U.S. insurers, whilst still achieving good average growth during the 12 months under review, were shown to be growing at a slower pace than the preceding periods,” said Jon Laux, report author and head of cyber analytics at Aon, in a statement. “One relative bright spot in 2018 was the small commercial cyber space, where growth is now well underway. SME risks have been highly desirable to insurers given that cyber claims frequency and severity are both lower for smaller companies.”