Pricing for US cyber insurance is stabilising after dropping for several years; however, claims from the 2023 underwriting year are still developing, while vulnerabilities are being discovered and exploited faster, Howden Re analysts highlight in a recent report.
Rate softening has now entered its fourth year, and whilst Howden Re’s pricing data shows cyber rates continuing to soften, the pace of reduction has materially decelerated.
The reinsurer’s Risk-Adjusted Rate Change (RARC) reforecast for 2026 aligns closely with market reality, with the original projection of -4.9%, lining up well with actuals at -5.4%.
Between 2023–2025, it saw over an 8-percentage-point delta between forecast and actuals.
“Coalescence in actual and expected RARC is a positive sign that the market is stabilising,” said Luke Foord-Kelcey, Global Head of Cyber at Howden Re. “Whilst the 2023 underwriting year is of interest, this is materially different from 2019 when the whole market experienced difficulties. This is more specific, depending on the demographics of the underlying portfolio.”
Pricing dynamics continue to diverge sharply by geography. Since early 2024, US rates have fallen an estimated 9.7%, while rest-of-world pricing is down 24.5%.
Competition has increased in international markets because of the opportunities presented by lower penetration rates and a more favourable loss environment.
However, the 2023 underwriting year remains a focal point for reinsurers, particularly across US portfolios where privacy and data breach litigation is expanding down-market, the report notes.
Unlike the first-party ransomware losses that drove the 2019-2021 hard market, third-party liability claims develop at a much slower pace.
Drawing parallels to long-tail deterioration in the Directors and Officers (D&O) sector, Howden Re’s Cygenesis report cautioned that liability outcomes take years to emerge on carrier balance sheets.
Michael Giuliano, Director at Howden Re, commented: “In the US, privacy litigation has steadily worked its way down the market, and smaller businesses are now facing claims that once felt like a large-company problem. These trends also help reinforce the value proposition cyber insurance provides to policyholders.
“We’re increasingly seeing cedents leverage technology enabled distribution and strategic partnerships to widen access to coverage, which could support greater adoption, more diversified portfolios, and continued opportunities for reinsurers to support.”
On the technology front, artificial intelligence (AI) tools are accelerating the speed at which software vulnerabilities are found. The number of newly identified security flaws jumped by 105% between January and September 2026 compared to the same period in 2025.
However, research shows that actively exploited vulnerabilities make up less than half a percent of the total pool, meaning the vast majority of flaws are never actually weaponised by attackers.
Harriet Gruen, Head of Cyber Threat Intelligence at Howden Re, stated: “While we are seeing exploited vulnerabilities pick up, it is worth keeping in proportion. Defence-in-depth measures such as segmentation, allow-listing and strong access controls all sit between an exploited vulnerability and a claim, and they’re doing a lot of work. The task for the market will be to follow the indicators closely and let them inform pricing accordingly.”
As the January 1 renewal season approaches, primary insurers and reinsurance partners are adjusting their strategies.
While carriers continue tailoring proportional and non-proportional protection to their specific portfolios and growth plans ahead of 1.1, early indicators suggest the downward cession trend could reverse in 2027, especially on a weighted-average basis.
Howden Re’s H2 outlook indicates a slowing multi-year decline in quota share cessions, the firm noted, with the weighted average for placements live at 1 July down 1.5 points year-on-year to 47.1%.
Benign catastrophe years have kept non-proportional buyers in a strong position. Mid-year aggregate stop loss attachment points averaged 108% of underlying limits, eight percentage points lower than 2025.
Average rate on line eased to 7.23%, with risk adjusted reductions near 20%. However, “event risk remains, particularly as organisations become more dependent on shared technology infrastructure and connected applications,” analysts warn.
Howden Re estimates a loss similar to 2008’s moderate property cat year could materially affect pricing, as the ten largest reinsurers provide about 87% of capacity.
“The carriers best placed for 1 January renewals will look beyond today’s pricing environment to understand how claims development and emerging threats could affect future performance,” Howden re concluded.
