Cyber reinsurance capacity surged by $250 million in the first half of 2025. Lockton Re reports that this growth comes amid cyber insurance rate declines ranging from 5% to 15%. The drop is sector-dependent, with mid-market entities benefiting the most due to fierce competition. New entrants and seasoned reinsurers alike fueled this capacity boom. Many brought fresh capital or expanded into the cyber class for the first time. Most of the new capacity was non-proportional, shifting the market dynamics in favor of buyers.
“Emerging markets have become a bigger strategic priority”
Lockton Re – Global Cyber Reinsurance Market in H1 2025
It’s a Buyer’s Paradise
The balance of power has tilted. Cedants now enjoy greater leverage. They’re pushing for better pricing, terms, and financial security from reinsurers. This shift has allowed some to increase retention or walk away from underperforming layers.
The cyber reinsurance market is soft. Reinsurers are feeling the squeeze on their margins as competition intensifies and clients demand more favorable conditions.
More Cover, Fewer Dollars
Buyers used savings from rate reductions to increase coverage limits. Others chose to cut costs outright. Reinsurers responded with modular and tailored products. Coverage is now broader, including non-IT suppliers, reputational damage, and regulatory response.
New geographies, such as Southeast Asia, Latin America, and the Middle East, became hotbeds of activity. Local MGAs emerged as vital players, bridging regional needs and global capacity.
Systemic Risk Looms
Cyber remains volatile. Recent ransomware attacks have targeted UK retailers, US education services, Korean telecom companies, and insurers. Common threat actors have exploited weaknesses in third-party software.
Events like the Iberian Peninsula blackout, although not confirmed as cyberattacks, highlight vulnerabilities in critical infrastructure. This has kept cyber exclusions in place for essential utilities.
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Retro Market Flares Back Up
Cyber retrocession rebounded. Appetite from traditional reinsurers and alternative capital grew, especially among larger players managing cyber exposure.
Portfolio quality dictated rate outcomes. Top-tier books enjoyed reductions, while diversified structures—such as quota shares and XoL—dominated.
AI: Friend and Foe
AI is a rising cyber threat. Hackers use it to create deepfakes and automated attacks. Yet insurers also see opportunity. New products now offer cover for AI failures, hallucinations, and algorithmic errors.
AI also brings clarity. Investors and carriers are becoming more comfortable with cyber catastrophe models, such as Perils-CyberAcuView, which are now used in ILWs and cat bonds, totaling nearly half a billion dollars.
“One area of challenge and opportunity is presented by the rapid adoption of artificial intelligence (AI).”
Lockton Re – Global Cyber Reinsurance Market in H1 2025
Emerging Markets Rise
Emerging markets got attention. Reinsurers entered cautiously, favoring quota share arrangements. Regulatory customization and simplified policies paved the way. Cyber offerings were often bundled with E&O products.
Risk remains, but improved tech resilience and time-zone-limited impact (as seen in the Crowdstrike incident) are building confidence globally.
Cedants Shift Focus
Large cedants now focus more on systemic and catastrophic layers rather than one-off shock losses. Many are integrating ILS instruments to diversify their capital and support the long-term growth of their cyber portfolios.
Explain it like I’m a 5th Grader: The Buffet Table
Think of cyber reinsurance as a giant buffet. Last year, the food was scarce and overpriced. But, now, the table is overflowing. Prices have dropped. Diners, aka cedants, are getting picky. They demand tastier dishes and better service. Some even bring their own cutlery (retaining more risk). Meanwhile, chefs (reinsurers) strive to maintain profits despite serving generous portions. As Churchill apparently said, “To improve is to change; to be perfect is to change often.” The cyber market just swapped chefs mid-service.
Martin Hinton is the Executive Editor and Publisher of Cyber Insurance News and Information. With over three decades of journalism experience across six continents, his work encompasses investigative reporting, documentaries, and coverage of cultural, political, and business news. To learn more about his career, click on his name to visit his LinkedIn page.
