While heightened geopolitical tensions stemming from the Iran conflict are expected to drive increased cyber activity and strengthen demand for insurance protection, the soft market, evidenced by slowing cyber premium growth in recent years, is likely to persist unless a major cyber loss event materially resets expectations for future claims, according to Morningstar DBRS.
A new report from the firm suggested that the escalation of the Middle East conflict has intensified state-linked and proxy cyber activity, elevating global cyber risk alongside reported incidents affecting commercial entities, including the publicly disclosed March 2026 attack on Stryker Corporation.
“Although kinetic hostilities between the U.S. and Iran are paused as of the time of writing this commentary, cyberattacks may persist or even intensify under these circumstances, given their relatively low cost, ease of deployment, and challenges in determining attribution,” Morningstar DBRS’ report observed.
Elsewhere in the report, the firm noted that following several years of rapid expansion, the global cyber insurance market has entered a period of moderate growth, with lower prices across most regions.
This shift was reportedly driven by low insured losses, tighter terms, and increased market competition with ample insurance and reinsurance capacity.
“The cyber insurance market features substantial risk sharing, with reinsurers generally assuming a material portion of the overall exposure, reflecting the ongoing uncertainty around loss frequency and severity. As there have been no major systemic cyber loss events since 2023, insurers have gained greater confidence and have been able to retain a larger share of risk in recent years,” Morningstar DBRS said.
As per the report, the April 2026 cyber reinsurance renewal season reflected these conditions, with rate reductions of approximately 30% in the U.S. market, supported by stable performance and lower tail-risk pricing.
Morningstar DBRS continued, “While the latest comprehensive data is limited in the cyber insurance industry, the insurers’ profitability has been strong, with the average combined ratio estimated at around 70% in 2024, partially supported by the insured companies’ enhanced risk controls, such as the widespread adoption of multifactor authentication and secured offline backup arrangements.
“Cyber insurance industry fundamentals remain resilient, supported by disciplined underwriting, low insured losses, and ample capacity, even as geopolitical tensions elevate tail risk and systemic uncertainty.”
