Sustaining demand in the cyber insurance market is vital for long-term growth, requiring increased investment and innovation in product design to deliver more comprehensive, tailored solutions that position cyber coverage as an essential, value-driven investment, according to a recent report by Gallagher Re.

The reinsurance broker emphasised that ensuring sustainable growth in the cyber insurance market is not just about capital and capacity, but also about increasing demand.

“If excess capital enters the market without sufficient demand, it will lead to oversupply and market softening,” said Gallagher Re.

A key driver of demand is ensuring that insureds view cyber coverage as a necessary investment for managing risk, rather than an optional cost.

Now is the time to invest in education and build a deeper understanding of cyber risk, tailored to the specific needs of different market segments.

“Industries such as manufacturing, energy and telecommunications face unique operational technology risks that a one-size-fits-all cyber product may not fully address. By refining risk assessment and tailoring solutions, insurers can expand the market while providing more effective protection,” the firm explained.

At the same time, investing in the right technology—whether in advanced risk modelling, underwriting automation, or continuous security monitoring—ensures that insurers are equipped to manage today’s risks and are well-positioned to adapt as the landscape evolves.

Strategic partnerships, particularly in reinsurance, will also be essential to unlocking sustainable growth when conditions allow.

Gallagher Re noted that, until 2023, its cyber team had faced challenges in securing sufficient capital. However, since then, meaningful progress has been made. By partnering with the broader capital markets, Gallagher Re has demonstrated its ability to access a significantly larger pool of capital.

Notably, 144A cyber cat bonds are now able to attract more than $500 million in limit.

The broker intends to maintain momentum with the ILS community, ensuring that the right partnerships and structures are in place to enable all parties to capitalise on the next hard market.

Historically, the cyber market has responded to major loss events by raising rates and reducing exposure. Gallagher Re is advocating for a shift in approach: growing market aggregate and increasing written premium, rather than simply adjusting rates.

Gallagher Re urges underwriters to prepare during this softer cycle to gain stakeholder trust and demonstrate that leaning into a hard market is a viable strategy.

“Investing in a softening market may seem counterintuitive, but, as we saw with the Class of 2001 and 2005, those who do so strategically will likely emerge as long-term winners. This will take confidence and capital,” said Gallagher Re.

“And Gallagher Re will support those innovators by proactively investing further to ensure we are able to serve our clients for their future needs — both in terms of inward premium and capital. This will ensure that they have dry powder readily available when the market turns, enabling strategic growth rather than reactive retrenchment.”

The firm believes that growing the market sustainably means expanding aggregate capacity, not just premium.

By laying the groundwork now, Gallagher Re concludes, the industry can build a more resilient, long-term cyber insurance market—one that doesn’t just react to losses, but is prepared to grow through them.

The post Sustained demand key to long-term cyber re/insurance market growth: Gallagher Re appeared first on ReinsuranceNe.ws.