Cyber insurance premiums are on the decline globally as businesses enhance their defences against cybercrime, despite a rise in ransomware attacks, according to a new report from insurance broker Howden.

The report, released on Monday, highlights a significant shift in the cyber insurance landscape.

Following a surge in premiums during 2021 and 2022, driven by pandemic-related cyber incidents, the market has seen a notable turnaround. Howden's annual report reveals double-digit price reductions in 2023/24, with the cost of cyber insurance continuing to fall into 2024.

Sarah Neild, head of cyber retail, UK at Howden, explained: "Favourable dynamics have persisted into 2024, with the cost of cyber insurance continuing to fall despite ongoing attacks, heightened geopolitical instability and the proliferation of Gen AI."

The report attributes this decline to improved cyber hygiene amongst insureds, which has helped to prevent or mitigate the impact of attacks. Basic security measures, such as multi factor authentication (MFA), have played a crucial role. Neild likened MFA to "locking the door when you leave the house," emphasising its fundamental importance in cybersecurity.

Despite these positive developments, the threat landscape remains active. Recorded ransomware incidents rose by 18 per cent in the first five months of 2024 compared to the previous year. However, businesses are becoming more resilient, with improved back-up systems and cloud providers helping to reduce the costs associated with business interruption following an attack.

Looking ahead, the €13.8 billion global cyber insurance market is poised for significant growth, particularly in Europe. Shay Simkin, global head of cyber at Howden, stated: "The full potential of cyber insurance can be unlocked by improving access to areas currently underserved by the market."

The report projects that more than half of premium growth up to 2030 will come from non-US territories, with major European economies like Germany, France, Italy, and Spain offering substantial growth potential.

As the cyber insurance market enters a new phase of development, it appears to be striking a balance between a heightened threat landscape and improved risk management practices, setting the stage for continued innovation and expansion in the years to come.

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