The cyber insurance and reinsurance market has rarely seen a period as dynamic as 2024 and 2025. As the industry’s leaders gather at the Rendez-Vous de Septembre, the conversation is dominated by a new wave of innovation, shifting risk appetites, and the ever-present specter of catastrophic cyber events. Against this backdrop, ReInsurance Business sat down with Erica Davis (pictured), managing director and global co-head of cyber at Guy Carpenter, to discuss the latest market dynamics, the evolution of buying habits, and the innovations reshaping the sector.
The cyber insurance market has rebounded and expanded significantly in the past year. “It has developed and returned quite significantly. Guy Carpenter estimates the market size at US$16.6 million. We have seen portfolios grow in size and scale,” Davis explained. “As a result, through mid-year we had cedants evaluating, reassessing their approach and quota shares for cyber capacity.”
This growth comes amid a surge in cyber incidents. According to industry data, global ransomware attacks increased by over 70% in 2024, with the average ransom demand rising to $1.5 million. The first half of 2025 has already seen several high-profile breaches, including a coordinated supply chain attack affecting more than 200 organizations worldwide.
As portfolios have grown, so too has the need for more nuanced risk transfer solutions. The market’s evolution is not just about size, but about how participants are rethinking the very structure of cyber protection.
One of the most notable shifts has been in the design of catastrophe covers. “Looking at cyber catastrophe, we see a lot more movement in terms of how clients are assessing the appropriate structure and approach to cyber cat,” Davis said. “Firstly, we had many clients who had purchased aggregate stop loss protections and over the years there haven’t been meaningful recoveries. As such, clients are re-evaluating the attachment points of those covers and the pricing efficiencies.”
She continued: “Another shift over the last 24 months has been the movement in event-based covers, which gained sizeable traction in 2024. But there was also a flurry of small-scale cyber catastrophes that highlighted the potential for basis risk. So wrapping 2025 and looking to 2026, there has been unprecedented innovation in terms of how to blend lower attaching covers that protect clients in a meaningful way from those realities.”
This evolution in cover design reflects deeper changes in how insurers and reinsurers are thinking about risk - changes driven by both market experience and the evolving threat landscape. Davis noted a growing interest in risk excess of loss covers as well: “They are garnering more interest from cedants and markets alike,” she said.
Behind these structural shifts are two main drivers. “One has been the lack of meaningful recoveries on aggregate stop loss creating pressure on attachment points and pricing approaches,” Davis said. “The second is cyber catastrophe has been more contained, to-date, than previously expected. The lack of a single super catastrophe has actually played out as a series of smaller catastrophe events.”
Recent data supports this. While the industry has yet to experience a “cyber hurricane,” the past 18 months have seen a steady drumbeat of smaller but still costly events - ransomware, data breaches, and supply chain attacks - that have tested the resilience of both insurers and reinsurers.
As a result, buyers are demanding more tailored solutions. “One comment we hear is that buyers want their unique portfolio characteristics recognized in their approach. A bespoke approach. On the heels of the hard market, you saw a broad-brush approach to cyber programs as a result of those market conditions. Now that these have matured and evolved, buyers are looking for the unique characteristics of their programs to be recognized.”
This demand for customization is fueling rapid innovation. “On the modeling side, the new versions of the leading cat vendor models have showcased expansive methodologies and enhancements for quantification of cyber catastrophe,” Davis said. “They have continued to grow in flexibility and granularity while also capturing more of those recent datasets relating to small-scale catastrophes.”
Guy Carpenter has responded with new structures to address client concerns. “We recently released Step Up Aggregate. This solution is based on a low upfront pricing approach, combined with a rate online that increases only if the cover is at risk of attaching. Clients want to benefit from a more aggressive, low upfront pricing approach with recognition that there needs to be a balance between buyer and seller.”
Event-based covers remain popular, but Davis noted the challenge of basis risk: “Threat actors are becoming more advanced and sophisticated,” she said. “And so ringfencing what a cyber cat looks like has been a challenge. There are 30+ variations on those definitions, which limits the market’s ability to have a wraparound solution. We have Cat Stop+ where there is a single limit, but if an event falls outside that definition, there is an aggregate stop loss that sits behind it.”
As the market evolves, collaboration between reinsurers, brokers, and clients is more important than ever. “Information exchange and education have been critical to the structural advancements in the market,” Davis said. “Creating bespoke reinsurance structures requires refinements to vendor cat model approaches. It also demands a lot of joint education across brokers and markets to understand the objectives and the nuance to these new structures. So you have to educate the markets on what problems you’re solving. You have to partner with them very closely.”
This spirit of partnership and shared learning is palpable at Monte Carlo, where industry leaders are not just discussing deals, but also exchanging ideas and strategies for tackling tomorrow’s risks.
Looking to the rest of 2025 and beyond, Davis highlighted two key themes. “One is trend assumptions – there are regional differences, driving different trend assumptions and portfolio performance,” she said. “Currently, rest-of-world dominant portfolios are outperforming North America.
“Globally, an issue is the proliferation of AI and how it can shift the dynamics of cyber risk and how it can be leveraged defensively. So we’re tracking those developments on both fronts. That’s a theme we expect to be paramount.”
As the sun sets over Monte Carlo and the industry looks ahead to 2026, the market’s ability to innovate, collaborate, and adapt will be tested as never before. But as Davis and her team at Guy Carpenter demonstrate, the sector is rising to the challenge - one innovative solution at a time.
