The cyber insurance market is continuing to stall with organic growth slowing and rates declining, according to a report Wednesday from global insurance firm Swiss Re.
Increased competition among insurers has led to a third consecutive year of reduced rates, according to the report, as the available supply of cyber coverage has exceeded current demand. The market imbalances have forced insurers to make concessions on premiums, cybersecurity controls and coverage limits.
The insurance industry has grown increasingly concerned in recent years about systemic loss events and the risk of liability over data privacy. That has led to worries over whether additional premium cuts are sustainable.
Insurance premiums in 2025 are expected to reach $15.6 billion, according to Swiss Re, but growth estimates have been revised downward, from 6% to 5%, amid changing market conditions.
Much of the existing growth has been dominated by large corporations that need coverage, while cyber insurance penetration has been limited in the small business sector.
“Given this very dynamic cyber market environment, it is difficult to predict future rate trends,” Fabian Willi, head of cyber key accounts at Swiss Re, told Cybersecurity Dive via email.
“However, it has become apparent that for future sustainable growth, the market needs to expand or enter into new customer segments, such as the SME [small and medium enterprise] space where cyber insurance penetration is at a low 10-20%.”
The high level of competition in the existing market means that for many organizations, they have a leg up in their ability to negotiate favorable terms, according to Willi. Therefore insurers trying to protect their share of the market are unlikely to impose more rigid underwriting standards or strict standards. Despite those conditions, policy holders should not expect any loosening of standards.
“With the current market dynamics, we believe it is paramount for market participants not to compromise on minimum cyber security hygiene requirements as part of the underwriting process,” Willi said.
Swiss Re’s report is consistent with overall trends in the cybersecurity market, according to Sridhar Manyem, senior director, AM Best. His agency has seen a continued softening in prices and loss ratios have been in the 40% range, Manyem told Cybersecurity Dive.
“We do not believe that the industry has been tested by a systemic cyberattack, but the underwriting is still cautious with healthy support from the reinsurance market and a focus on terms and conditions,” Manyem said.
