Howden Re, the reinsurance arm of the Howden Group, has published Cygenesis: Origins of cyber market cycles, a new report examining how different insurance and capital market cycles can be combined into a single framework for understanding the cyber market.
The study explores influences shaping the current soft market and outlines conditions that could lead to a future turning point, with analysis attributed throughout to Howden Re.
According to Howden Re, the cyber insurance market is now in its fourth consecutive year of rate softening. The firm suggests that anticipating future developments requires a broader approach than assessing cyber risk in isolation, instead integrating threat intelligence, capital flows and changing loss patterns.
Through its Cygenesis framework, Howden Re draws comparisons with property catastrophe, directors and officers (D&O) liability, and capital markets, examining the drivers behind current pricing conditions, the triggers that have historically shifted more established markets, and the factors likely to shape the next phase, including artificial intelligence, evolving loss trends and macroeconomic conditions.
Luke Foord-Kelcey, Global Head of Cyber at Howden Re, commented: “The cyber market is maturing rapidly, but despite growing up quickly, cyber remains a relatively new class, which is why cycle analysis is so valuable. Cedents need to consider a broader range of outcomes, from shock events to gradual loss accumulation and delayed claims emergence.
“Today’s picture is more nuanced: margin deterioration is playing out alongside a shifting threat landscape and evolving loss composition, so the signals of the next turn will be more challenging to read. Cygenesis provides a framework to assess these dynamics and position portfolios accordingly.”
Howden Re reports that previously expected growth drivers, including increased coverage limits, international expansion and stronger uptake among small and medium-sized enterprises, have not developed at the anticipated scale. As a result, increased capacity has outpaced demand, contributing to continued downward pressure on pricing.
The firm notes that policy limits have remained broadly stable, the United States continues to dominate global premium share, and additional capacity has intensified competition within existing segments rather than expanding the overall market.
Drawing on historical comparisons, Howden Re finds that market turning points are rarely driven by a single factor. The report suggests that a cyber event comparable to a moderate property catastrophe year could be sufficient to shift pricing conditions, without requiring an extreme, low-frequency loss scenario.
At the same time, Howden Re highlights that the growing share of third-party and longer-tail cyber losses could delay recognition of underwriting performance deterioration, potentially extending the current soft market even as profitability weakens.
Artificial intelligence is identified by Howden Re as an emerging influence on the threat landscape. The firm observes that AI is currently accelerating existing attack methods rather than introducing entirely new ones, with early indicators pointing to increased vulnerability discovery and exploitation.
According to the report, this may result in a higher frequency of cyber events rather than a significant increase in the severity of individual incidents, reinforcing a pattern of gradual performance erosion rather than a sudden market shock.
Howden Re concludes that the cyber market operates at the intersection of event-driven, accumulation-driven and macroeconomic forces, making pricing behaviour less linear than in more established classes.
The firm suggests that reinsurance structures may increasingly need to account for frequency and accumulation risks alongside severity, while multi-year capital solutions such as cyber catastrophe bonds could provide greater stability across market cycles.
It also notes that current macroeconomic conditions, including higher interest rates and geopolitical uncertainty, may support a higher baseline for pricing than in previous soft market periods.
David Flandro, Head of Industry Analysis and Strategic Advisory at Howden Re, added: “Cyber occupies a distinctive place within the broader re/insurance cycle. As a young class, it remains more exposed to evolving, idiosyncratic risks – from changes in the threat landscape to shifts in loss composition – while at the same time being increasingly influenced by the same macroeconomic and capital dynamics that shape more established lines.
“Cygenesis highlights a framework in which these forces are not static; their relative importance changes over time, making the cycle inherently more complex and less linear. Rather than pointing to a single trigger, the framework is intended to help market participants interpret how loss development, capital conditions and external volatility interact, and to navigate a wider range of potential outcomes as a result.”
Howden Re released the report following its third annual Cyber Reinsurance Summit at Ascot Racecourse, where industry participants discussed the findings and broader market developments.
The firm also recently expanded its cyber team with several new appointments, including roles focused on North America and actuarial capabilities, as part of its ongoing investment in modelling and threat intelligence.
