Fitch Ratings, a provider of credit ratings, commentary, and research, reports that the US cyber insurance market continued to deliver strong underwriting profits in 2024, even as the pace of premium growth began to slow.
According to Fitch Ratings, property and casualty insurers saw their third consecutive year of profitable results in the cyber segment, recording a combined direct loss and defence cost containment (DCC) ratio of 47%. This performance underscores cyber insurance’s potential as a profitable, though increasingly complex, line of business.
Fitch Ratings notes that while demand for cyber coverage remains robust due to mounting digital threats and growing corporate reliance on technology, the sector experienced a 6% decline in direct written premiums in 2024. This marks a notable shift after the market expanded significantly between 2020 and 2022.
Weaker pricing, fewer active policies, and strategic choices by larger firms to assume more risk through higher deductibles contributed to this drop, according to data analysed by Fitch Ratings using cyber-specific filings submitted to the National Association of Insurance Commissioners.
The inherent challenge in underwriting cyber risk lies in the fast-moving technological landscape. As Fitch Ratings explains, even with improved risk selection processes, insurers’ ability to fully anticipate exposures continues to lag behind the pace at which cyber threats evolve.
Companies are accelerating digital transformation efforts to improve efficiency and revenue, but in doing so, often build systems with security considerations as a secondary concern. This expanding digital infrastructure increases the vulnerability surface and elevates insurers’ exposure, prompting them to reassess coverage terms, pricing, and deductibles on a regular basis.
Fitch Ratings highlights that although the risk environment is intensifying, it does not always translate directly into worse insurance outcomes. This disconnect is due to proactive risk management, evolving underwriting practices, and stricter policy conditions.
As the number of carriers offering cyber insurance grows, market concentration has decreased. Fitch Ratings reports that the top 10 writers in the US held 51% of the market at year-end 2024, compared to 69% in 2019. Leading carriers included Chubb Limited and The Travelers Companies, Inc., each with 8% market share, followed by Fairfax Financial Holdings Limited, Tokio Marine Holdings (U.S. group), and AXA XL, each at 5%.
Even as insurers show increased appetite for cyber risk, Fitch Ratings warns that the performance of this segment should be viewed in context.
Cyber premiums still represent just 1% of total commercial lines, meaning they exert limited influence on overall profitability for most multiline insurers. Moreover, cyber insurance remains one of the most reinsured segments in the industry.
According to Fitch Ratings, many carriers cede half or more of their premiums, which significantly alters net results from what is seen in direct figures.
The structure of coverage also affects comparability across time. Beginning with 2024, data from insurers has been recategorised to better reflect primary, excess, and endorsement cyber policies—refining the previously broad classification of standalone and package products.
Fitch Ratings notes that while this change complicates direct historical comparisons, the industry-wide totals remain largely consistent. In 2024, endorsement policies made up the largest portion of outstanding contracts at 56%, followed by 41% for primary and 3% for excess policies. This distribution reflects insurers’ preference for retaining greater control over policy terms.
Despite a 2% reduction in the number of active policies, claims volumes surged nearly 60%, according to Fitch Ratings. However, this rise in reported claims did not signal a proportionate increase in paid losses.
Only 26% of claims in 2024 were closed with indemnity payments, a decline from 35% in 2023. Still, the average payout climbed sharply to $246,000, up from $173,000.
Fitch Ratings attributes this rise to a mix of factors, including the nature of attacks, higher remediation costs, and a more active regulatory environment imposing stricter reporting requirements and penalties.
Claims data continues to reflect the unpredictability of the cyber threat landscape. According to Fitch Ratings, the cyber segment’s claims severity could rise due to increasingly expensive ransomware incidents, expanding data privacy legislation, and the threat of widespread digital events capable of triggering large, correlated losses.
Fitch Ratings expects that despite recent pricing declines—5% lower in the fourth quarter of 2024, per Marsh’s Global Insurance Market Index—the long-term viability of cyber insurance will depend on the industry’s ability to maintain underwriting discipline and adjust to new loss drivers.
Looking ahead, Fitch Ratings anticipates the cyber insurance market will continue to grow, albeit more slowly and unevenly.
Munich Re projects global cyber premiums to reach $32 billion by 2030, double their 2025 estimate. The U.S. will remain the largest contributor to this total. Still, Fitch Ratings underscores that the industry’s success will hinge on convincing smaller organisations, often constrained by tighter budgets, of the value of cyber coverage.
Fitch Ratings concludes that while cyber remains a relatively small part of total commercial insurance, its influence is growing.
Ongoing standardisation of policy language, deeper claims experience, and more refined underwriting practices are expected to stabilise results in the coming years.
The firm’s analysts, including Gerald B. Glombicki, Tana Marcom, and Elizabeth Kolling, continue to monitor developments in this dynamic insurance segment.
