Portfolio diversification could reduce (re)insurer cyber losses by 42%

By diversifying their portfolios across geography, revenue, industry and technology, (re)insurers could reduce the losses across their cyber books by up to 42%.

This is according to a report published today (25 September 2025) by risk analytics firm CyberCube, which also reported that global cyber premiums now exceed £12bn ($16bn) and global insured limits sit just under £2.2tn ($3tn), highlighting the need for diversification to avoid large losses.

Traditionally cyber insurance has been seen as a difficult product to diversify, especially given that the globally interconnected network that underlies digital technology makes geographic diversification less impactful than in other lines, for example property insurance.

Indeed, the benefit of geographic diversification against a 200-year return period event was calculated at 2%, far behind revenue (13%), industry (23%) and technology (38%).

Diversification and mitigation

CyberCube also suggested that by further adding mitigation practices to their operations, (re)insurers could see losses from catastrophic cyber events drop by up to 60%.

Such mitigation practices include backup protocols, software patch management, network segmentation and avoiding single points of failure.

Jon Laux, vice president of analytics at CyberCube, said: “The cyber insurance market has experienced rapid and sustained growth over the past several years, emerging as a catastrophe-exposed and capital-intensive line of business.

“This trajectory, while promising, heightens the need to understand the role of diversification and risk mitigation – two themes that have been extensively examined in natural catastrophe insurance, but remain comparatively underexplored in cyber.”