Analysts at JMP report that reinsurers are increasingly leaning into the cyber market, a move expected to drive better pricing, and terms and conditions for cedants at the January 1 renewals, building on trends observed at recent renewals.
This assessment follows JMP’s recent meetings with insurers, reinsurers, and brokers in London, as well as earlier discussions in Monte Carlo (September) and Singapore (November).
According to analysts, the growth of the cyber reinsurance market is unsurprising given the rapid evolution of the primary cyber market. Industry incumbent multi-line carriers like Beazley, Chubb, and AXIS are competing alongside cyber specialists such as At Bay, Coalition, and Resilience in a fast-expanding market segment with significant long-term potential.
Product innovations, including recently executed cyber catastrophe bonds, are providing primary insurers with additional tools for tail protection. Cyber cat bonds have been gaining traction, with at least five different re/insurers issuing cyber ILS since early 2023. The Geneva Association has suggested that such instruments could play a key role in bridging the cyber protection gap.
For specific details on these deals, refer to the Deal Directory on Artemis, our ILS-focused sister publication, where you can filter the list to view information about every cyber cat bond.
The CrowdStrike incident, while not expected to result in significant losses for the sector, was described by JMP analysts as a “dodged-bullet moment.” This event underscores the value of cyber protection and is expected to contribute to sustained growth in the sector over the long term.
While industry losses linked to the CrowdStrike IT outage are projected to remain manageable, a July 2024 Reinsurance News poll revealed that most respondents anticipate losses exceeding $1 billion, with 38% estimating they could surpass $1.5 billion.
Analysts also highlighted that the Change Healthcare incident could have been far worse without substantial recovery efforts funded by its parent company, UnitedHealth. Meanwhile, the CDK Global outage, though less publicised, appears to have caused more disruption than the market is letting on.
Looking ahead, Moody’s Ratings warns that cyber risk is set to intensify in 2025 as attackers adapt to improved corporate cyber defenses and leverage advances in artificial intelligence (AI) to increase the volume and effectiveness of their attacks. This evolving threat landscape is expected to further drive the adoption of cyber re/insurance.
