The U.S. cyber insurance market recorded its first-ever decline in direct premiums written in 2024, a notable turning point for a segment that had experienced uninterrupted growth since data collection began in 2015.
According to the latest AM Best Market Segment Report, total direct premiums for standalone and packaged cyber coverage dipped by 2.3% year-over-year, falling just below $7.1 billion. The drop ends a years-long streak of growth fueled by mounting cyber threats and surging demand for digital risk coverage.
While the decline may appear concerning, AM Best analysts emphasized that the contraction stems primarily from declining rates—not a lack of buyer interest.
“Cyber insurance is constantly evolving due to the dynamic nature of digital threats and defenses. It resembles employment practices liability insurance in its early stages—initially dismissed, later adopted widely. Policies have expanded from covering a single risk to including up to 14 coverage lines.” said Daniel Ginden, Managing Director at Novatae Risk Group,
The line’s loss ratio remained below 50% in 2024, underscoring its continued profitability despite shifting conditions. That low ratio suggests that, for now, insurers with disciplined underwriting strategies are still achieving favorable performance.
“The key to managing this line is agility. New risks like email spoofing and system breaches emerge regularly, demanding continuous innovation. Flexible, adaptive approaches are essential as cyber remains one of the most complex and unpredictable insurance lines.” said Ginden
The report also flagged an emerging shift: more large organizations are transferring cyber risk to their own single-parent captive insurers. This trend is especially evident among companies with favorable claims histories that prefer to retain premiums in-house.
Because captive insurers are not required to report to the National Association of Insurance Commissioners (NAIC), this activity may be suppressing official premium totals and masking the true size of the market.
Even as total cyber premium volume contracted, surplus lines carriers—key players during the 2020–2022 hard market—continued to increase their market share. These non-admitted carriers have remained the go-to option for complex or higher-risk placements, often structuring excess layers and bespoke endorsements outside standard markets.
However, the pricing advantages they once held have begun to recede. New entrants that benefited from hard market conditions without legacy losses are now operating in a more competitive environment with softening rates and increasing claims activity.
The cyber insurance space is transitioning into a more mature and cyclical market. The first recorded decline in written premiums reflects a rationalizing of rates and a shift in how risk is being allocated—whether through captives, non-admitted carriers, or more selective underwriting strategies.
For insurance professionals, the implications are clear: while demand for cyber coverage remains, competition is intensifying, pricing power is softening, and retention strategies are evolving.
AM Best’s full report includes further analysis on capacity trends, segment profitability, and structural changes within the cyber insurance market.
