Global cyber re/insurance premium growth is slowing for the second consecutive year, as increased competition and easing demand have led to lower prices, according to the latest insights from Moody’s.
Global cyber re/insurance premiums reached nearly US$15 billion in 2024, a 7% increase from the previous year. Most of this growth occurred outside the United States, where premiums were slightly lower.
The cyber re/insurance market remains in an early stage, with notable differences in policy language, terms, and conditions across the sector. Moody’s notes that these variations reflect the evolving nature of the market and the ongoing need for standardization.
Profitability in the cyber re/insurance segment remained solid in 2024, even as combined ratios rose and prices declined. The US aggregate combined ratio for primary cyber re/insurance was approximately 79%, while excess coverage posted a ratio of 84%. Moody’s attributes continued profitability to significant price increases in 2021 and 2022, as well as tighter policy terms.
However, as competition has intensified, pricing has declined in the low-single digits, and some re/insurers are reducing or re-underwriting their cyber portfolios. Ransomware continues to be the largest driver of cyber re/insurance claims, with business interruption representing the main source of losses.
The cyber market’s slowdown is limiting growth, but systemic risk and aggregation potential remain significant concerns for re/insurers. In response, re/insurers are tightening coverage terms, maintaining disciplined pricing, and investing in real-time threat monitoring and innovation in cyber risk modeling.
Swiss Re projects that global cyber insurance premiums will reach US$15.6 billion in 2025 and US$16.4 billion in 2026, with the sector’s growth outlook revised to a 5% compound annual growth rate from 2023.
North America currently holds 66% of the market, followed by Europe at 21% and Asia-Pacific at 10%. This distribution highlights the continued dominance of the US market, but also points to expanding opportunities in other regions.
Underinsurance remains a key challenge in the cyber re/insurance industry, especially among small and medium-sized enterprises (SMEs). Many SMEs remain uninsured or underinsured despite their vulnerability to cyber threats, creating a pronounced protection gap. Addressing this issue will require tailored, accessible products and smarter distribution models to meet the needs of smaller firms.
Moody’s observes that re/insurers are adjusting their reinsurance strategies as they become more comfortable managing attritional losses. Many are now considering excess of loss contracts instead of relying solely on traditional quota share arrangements, which often include a loss ratio cap.
The potential for systemic and aggregation risks remains a concern, prompting re/insurers and catastrophe modelers to enhance their modeling capabilities. Still, the market’s relatively short claims history and the shifting risk landscape make it challenging to predict the frequency and severity of large-scale events.
The rise of generative artificial intelligence (GenAI) is introducing new and evolving challenges for cyber re/insurers. Carriers are working to identify the additional risks associated with corporate use of AI and are offering coverage extensions that address compliance with emerging AI regulations.
Moody’s indicates that the widespread adoption of AI and other advanced technologies is likely to increase the frequency of cyberattacks. These attacks are expected to become more personalized and sophisticated, requiring re/insurers and their clients to deploy more robust detection and prevention tools.
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