Premiums from US cyber insurance coverage fell by 2.3% to just under $7.1 bn in 2024, marking the first annual decline since the National Association of Insurance Commissioners began collecting data in 2015, according to a new Best’s Market Segment Report.
Christopher Graham, AM Best senior industry research analyst, explained in an interview that the decline reflects contrasting dynamics between policy types and buyer sophistication.
We’re seeing the primary cyber insurance segment — aimed at more sophisticated insureds — experience pricing cuts, which drove the drop in premium.
Graham noted that these sophisticated insureds already maintain strong cyber hygiene and have tools in place to qualify for better rates. Some even moved coverage into captives, which are not captured in NAIC data.
“To that extent, is there a drop in total cyber coverage? No. Some of it simply moved to places that aren’t being reported,” he added.
Smaller entities, on the other hand, showed increased demand, continuing a trend from 2023. These businesses often buy cyber coverage as an endorsement to other policies, generating modest premiums that could not offset declines among larger buyers.
On performance, Graham said results remained strong despite a higher loss ratio compared to 2023. He attributed the increase to inflationary pressures and severity trends, noting that premiums are still well above pre-pandemic levels and loss ratios remain below 50%.
This is still the benefit of the hard market from 2020–2022
The report also highlights the role of excess and surplus (E&S) lines writers. Graham explained that sophisticated buyers, particularly those seeking standalone primary cyber policies, favor the flexibility of the E&S market.
These insureds understand their needs and use E&S carriers to craft specific wording, limits, and terms. Smaller businesses buying endorsements tend to remain on admitted paper.
“This split reflects the different needs of the market,” Graham said, emphasizing that large corporations continue to drive activity in the E&S segment.
