Premiums generated from cyber insurance coverage declined by 2.3% to slightly less than $7.1 billion in 2024 compared with a year earlier, marking the first ever decrease in the segment since the data was first collected in 2015, according to a new AM Best report.

Despite the drop in premium, the loss ratio for the U.S. cyber segment remained below the 50% mark in 2024, suggesting that the line of coverage is still profitable for those who choose to underwrite the risk. According to the report, the decrease in premiums is driven more by pricing changes than any changes in exposure.

“When premium grew during the hard market cycle, the growth significantly outpaced the pricing increases, indicating that demand for cyber insurance was increasing as well,” said Christopher Graham, senior industry analyst, AM Best. “Considering that the premium decrease is close to the pricing decrease, that would indicate that the demand for cyber insurance is steady.”

However, the report also notes that some large organizations may be shifting their cyber exposure to their own single-parent captive insurers. Such organizations that have a favorable loss experience find it beneficial to maintain the premium under the parent company’s structure and typically don’t file the related cyber data reports with the National Association of Insurance Commissioners.

Among the report’s other highlights:

• Much of the new capacity during the hard market came from surplus lines writers. Those carriers have held—and marginally increased—their market share even as the total premium slightly contracted;
• Surplus lines paper remains the prime spot for complicated cyber risks, and this is evident through the split among primary, excess, and endorsement coverage.
• While surplus lines writers benefited from the hard market pricing of 2020-2022, that benefit seems to have now worn off. When new writers enter the market during a hard market cycle, those writers get the benefit of the stronger pricing without having to pay the legacy losses.

AM Best has maintained a stable outlook on the global cyber insurance segment, citing a cautious level of underwriting in a dynamic risk environment.

To access the full copy of the Best’s Market Segment Report on U.S. cyber insurance, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=354887.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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