U.S. Cyber Insurance Premiums Experience First-Ever Decline Amid Pricing Adjustments

In 2024, the U.S. cyber insurance sector recorded its first decline in direct premiums written since tracking began in 2015, totaling $7.075 billion—a 2.3% reduction from previous figures. AM Best’s analysis attributes this unprecedented drop primarily to pricing adjustments, as the Council of Insurance Agents & Brokers noted an average pricing decrease of 1.6% over the last three quarters of the year. Despite lower premiums, demand remains stable, signaling a maturing market environment.

Claims frequency grew notably during this period, leading to higher loss ratios even amid declining premiums. First-party claims accounted for roughly 75% of all cyber claims, predominantly due to ransomware incidents. The market also faces increased litigation costs, prolonged discovery processes, and latent hacking threats, which contribute to rising overall claim costs and potential inflation of losses.

Third-party vendor risks have emerged as significant challenges, complicating policyholder and insurer liability scenarios. Subrogation pursuits against vendors may prove financially impractical or harmful to critical business relationships, creating strategic dilemmas for insurers. The market’s reliance on reinsurance—roughly half of premiums are ceded—further exposes the cyber segment to disruptions tied to reinsurers’ capital allocations.

Market leadership remains stable, though notable changes occurred among top insurers. Chubb continues to lead despite a slight premium reduction, while Travelers surged significantly to become the second-largest insurer in premiums. At-Bay Specialty dramatically increased market share and premiums by leveraging digital brokerage technology, reflecting an evolving distribution landscape. Captive insurers also gained prominence as large organizations seek customized coverage solutions and improved cyber risk management practices, albeit without visibility in industry statistics.