Lockton Re has released a new report examining the trajectory of the cyber insurance market and the innovations needed to support its expansion.
The report addresses the conditions required for the sector to meet ambitious growth targets through the end of the decade.
Industry estimates place the global cyber insurance market at between US$16 billion and US$20 billion in 2025, with projections for 2030 ranging from US$30 billion to US$40 billion or higher. The sector has recorded a compound annual growth rate above 20% since 2015, occasionally surpassing 30%.
Global cyber insurance premiums are projected to rise from US$15.1 billion in 2024 to US$27 billion by 2030, with some estimates suggesting the market could reach US$60 billion by 2040. While the United States remains the largest market, accounting for 70% of global premium, growth in the US has slowed, with a 2% year-over-year decline in 2024.
Europe has emerged as the new growth engine, recording a 22% compound annual growth rate over the past three years, and Asia is expected to play a greater role in the next phase.
While growth is expected to continue, recent increases in insurance capacity have led to a slowdown in the rate of expansion, with forecasts still suggesting annual growth above 10% through the remainder of the 2020s.
Market expansion is cooling as rate declines persist, with 2024 marking the third consecutive year of rate deterioration. Analysts note that this trend is neutralizing the organic exposure growth the market has worked to build.
Underinsurance remains a key challenge, particularly among SMEs, where many businesses remain uninsured or underinsured despite their vulnerability to cyber threats. The protection gap is pronounced in this segment, highlighting the need for tailored, accessible products and smarter distribution models.
Lockton Re’s report notes that, despite a recent softening in rates and a fall in absolute premium volume in the US reported by AM Best, consensus remains that the market will double in size by 2030. The analysis highlights the need to look beyond numerical projections and consider the underlying factors that will shape the market’s development.
The report identifies several priorities for the industry. Improved data quality is seen as essential for understanding portfolio risk and reducing uncertainty. Continued investment in granular risk modeling is necessary to address systemic threats and attract new capital.
The report also points to the need for flexible product offerings, particularly for small and mid-sized enterprises, where insurance penetration remains low.
Lockton Re’s research also underscores that the cyber insurance market has experienced only a handful of true catastrophe events, leaving limited data on how a single incident could impact multiple companies at once. This lack of historical precedent adds complexity to risk assessment and product design.
The report argues that investment in data, modeling, and product flexibility will be critical to meeting the needs of both large and small clients as the market evolves.
Lockton Re notes that a range of perspectives and ongoing investment will be necessary for the cyber insurance sector to fulfill its growth potential and adapt to a changing risk landscape.
“One of the inescapable facts of the cyber insurance market is that there have only been a handful of true cyber catastrophe events where single incidents have led to multiple impacted parties. As a result, there are limited data points to understand how a technology incident would affect multiple companies simultaneously,” Lockton Re head of Cyber Center of Excellence Oliver Brew (pictured above) said.
“Much research has been conducted on this, but, inevitably, there is an element of conjecture about how exactly this could manifest. Our call for investment in data quality, modelling investment and a flexible approach to product offering will really help the cyber market to reach its potential and service clients large and small effectively,” Brew said.
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