Cloud outages involving AWS, Microsoft Azure, and other major platforms triggered renewed scrutiny for cyber insurers in late 2025, prompting closer analysis of waiting periods, exclusions, and systemic-risk exposures as organizations prepare for 2026.
These incidents, which disrupted applications used by companies in aviation, banking, healthcare, and retail, follow earlier outages tied to a software defect affecting 8.5 million Windows devices and a Microsoft 365 interruption that impacted thousands of users. Insurers continue to evaluate how such events interact with cyber policy terms, with many reviewing sublimits, cloud-service definitions, and the duration thresholds required before coverage is activated.
The heightened focus on cyber risk arrives during a period of firm capital positions for property and casualty carriers. Lockton’s Market Update reports that underwriting results have generally improved across commercial lines, supported by healthier combined ratios and rising investment income. Carrier data shows premium changes ranging from a 7.4% increase to an 8.2% decline, along with combined ratio improvements between 5.7 and 12 points for several insurers. Even with these results, insurers continue to monitor loss trends, rate adequacy, and exposure growth heading into 2026.
Market conditions vary by line. Property, workers’ compensation, and cyber remain supportive for buyers. Liability, auto, and lead umbrella continue to post difficult conditions, while excess liability remains more predictable. Rates in directors’ and officers’ liability have leveled for public companies, and the environment for private firms and nonprofits shows early signs of pressure. Employment practices liability is showing firming patterns, and fidelity/crime and fiduciary liability remain stable.
Economic developments are contributing to uncertainty across the market. Inflation moved to 3.0% in September, unemployment reached 4.4%, and private-sector employment declined by 38,000 from October to November. Tariffs reached an effective rate of 16.8%, the highest since 1935, while consumer sentiment and CEO confidence surveys point to cautious business behavior. Government data delays following the shutdown have added further complications for planning purposes.
Political conditions are also in flux. The temporary reopening of the federal government left several appropriations issues unresolved, including debates on Affordable Care Act subsidies and tariff authority. Discussions continue on digital-asset rules, AI regulation, and tariff litigation, all of which sit alongside the approaching 2026 midterm cycle.
Lockton notes that organizations may need early renewal planning, clearer risk differentiation, scenario reviews, and coordinated work with brokers to adjust to these conditions. Recommendations include reassessing risk capital, reviewing program structures, and ensuring policy language addresses cloud outages and other systemic exposures.
Vince Gaffigan, Lockton’s director of US Market Engagement, said 2025 opened with uncertainty that continues into 2026.
