A major hack of a financial services payments system could cost the world $3.5 trillion, Lloyd’s has found, as demand for cyber insurance booms.

A “hypothetical but plausible cyber attack” would cause “widespread disruption to global business”, according to a scenario modelled by Lloyd’s together with the Cambridge Centre for Risk Studies.

The US would take the biggest hit within the scenario by losing $1.1 trillion over five years, followed by China and Japan with $470bn and $200bn respectively.

“The global interconnectedness of cyber means it is too substantial a risk for one sector to face alone and therefore we must continue to share knowledge, expertise and innovative ideas across government, industry and the insurance market to ensure we build society’s resilience against the potential scale of this risk,” said Bruce Carnegie-Brown, chair of Lloyd’s.

Research from the international law firm RPC last month found cyber security breaches for UK financial services companies increased threefold from 2021 to 2023.

The number of breaches increased from 187 to 640, with the biggest rise being seen in the pensions sector.

Cyber insurance saw more than $9bn in gross written premiums last year and is predicted to increase to between $13bn to $25bn by 2025, according to Lloyd’s.

However, the firm noted that this figure “represents a small portion of the potential economic losses that businesses and society face”.