Cyber insurance premiums experienced an unexpected decline in 2025, a trend that continues into 2026 despite a simultaneous increase in the severity and frequency of cyberattacks. This counterintuitive development signals a significant shift in the cyber insurance market, driven primarily by increased competition among carriers.
Lockton, a global insurance broker, reported an 11% drop in cyber premiums across its portfolio in 2025. The most substantial reductions occurred in the first half of the year, with a more moderate decrease observed in the latter six months. Lockton anticipates further declines, at least through the first half of 2026.
The decline in premiums comes after a period of substantial growth in the cyber insurance market, fueled by escalating ransomware attacks and data breaches. However, the influx of capital into the sector has created a more competitive landscape, putting downward pressure on pricing. This increased capacity, coupled with a steady demand for coverage, has resulted in the observed premium reductions.
Data from AM Best confirms the broader trend. The U.S. Cyber insurance market recorded its first-ever decline in direct premiums written in 2024, falling 2.3% to $7.075 billion. This decrease mirrored a similar trend in pricing, with the Council of Insurance Agents &. Brokers reporting an average 1.6% decrease in cyber insurance pricing during the final three quarters of 2024. According to Christopher Graham, Senior Industry Analyst at AM Best, the premium decrease closely aligns with the pricing decrease, suggesting that demand for cyber insurance remains relatively stable.
Despite the falling premiums, the risk landscape remains challenging. AM Best’s analysis indicates a significant increase in claims frequency in 2024, leading to higher loss ratios. Ransomware attacks, which accelerated five years prior, are now providing sufficient data for more traditional actuarial analysis, but a “tail” of potential losses remains due to protracted litigation and the potential for delayed exploitation of breaches. The firm cautions that increased litigation could further inflate claim costs, both in terms of direct expenses and legal fees.
The current market dynamics present a complex situation for both insurers and policyholders. While lower premiums offer some relief to businesses facing rising cyber risks, the underlying threat environment continues to evolve. The increasing sophistication of attacks and the potential for significant financial and reputational damage necessitate robust cybersecurity measures and comprehensive insurance coverage.
The trend also contrasts with broader insurance market conditions. While cyber premiums are falling, property insurance rates globally are experiencing the opposite effect, driven by a “soft market” and regional pressures, according to Marsh Risk. This divergence highlights the unique characteristics of the cyber insurance market and the specific factors influencing its pricing.
Looking ahead, the sustainability of these lower premiums remains uncertain. A significant cyber event – a large-scale ransomware attack or a major data breach impacting critical infrastructure – could quickly reverse the current trend and lead to a hardening of the market. However, for now, businesses seeking cyber insurance coverage are benefiting from a more competitive pricing environment.
The Fitch Ratings agency also anticipates continued pressure on cyber insurance renewal premium rates in the near term, barring any unforeseen major incidents. This suggests that the downward trend in premiums is likely to persist, at least for the immediate future.
