Fork in the Road for Cyber Insurance Market?

July 05, 2023

HARTFORD, CT – July 5, 2023 – The next three years will be critical to the long-term growth prospects of the cyber insurance market, according to a scenario-led analysis of the market’s dynamics released today by Conning entitled “Cyber Risk: On the Edge of Insurability.”  

In the absence of exceptional catastrophe losses in the near-term, Conning projects the cyber market will continue to grow at double digit rates, driven by strong new business inflows, both in the US and internationally. With rapid growth will come a far greater ability to absorb future catastrophe losses. 

Under another scenario, however, a still immature cyber market is rocked by one or more near-term catastrophe events on a scale not previously seen, denting confidence in available cyber risk models and deterring investors from committing capital to the nascent cyber catastrophe bond market, with three likely consequences:  


  1. In the absence of a large and liquid market for tail risk, the overall market lacks the capacity needed to meet demand at affordable prices.  
  2. Prices once again rise steeply, but now to a point where self-insurance looks more attractive than insurance to buyers. 
  3. Pressure grows for taxpayer financed risk transfer options.


Conning’s study explores a range of variables that feed into the above scenarios, including: 

  • drivers of demand for coverage, in the US and internationally and among companies of different sizes; 
  • the diverse perils commonly classed as cyber risk and the benefits of bundling or unbundling them;
  • the reliability of current cyber catastrophe models relative to the natural catastrophe models that have supported the steady growth of the insurance linked securities (ILS) market for natural catastrophe risks; and
  • the advantages and disadvantages of “policy tooling” to manage exposures – notably the insertion of policy exclusions for systemic risks such as war (broadly defined) and critical infrastructure failure.

Drawing upon a wide range of data sources supplemented by interviews with many of the cyber market’s most experienced underwriters and brokers, Conning’s report paints a nuanced picture of the market’s growth potential, based on an analysis of growth drivers and impediments.

“Cyber has grown faster than any other line of business in recent years,” notes William Pitt, a director at Conning and author of the cyber insurance study. “But it is still a small and immature market. The growth opportunity remains unrivalled, but investor confidence and carriers’ risk appetites are both fragile. Given this, the scale and imminence of catastrophe losses could permanently affect the market’s growth trajectory.”


“Cyber Risk: On the Edge of Insurability” is available for purchase from Conning by calling (888) 707-1177 or by visitinghere.


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Conning ( is a leading investment management firm with a long history of serving the insurance industry. Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.

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