Willis: US cyber carriers aiming for flat rates amid ‘intense competition’

By Michael Loney

May 7 - (The Insurer) - Cyber carriers are aiming for flat rates in the U.S. despite intense competition and increased capacity, including several new insurers and additional facilities joining the market, according to reports from Willis and Marsh.

In its Insurance Marketplace Realities 2025 Spring Update, Willis predicted rate change of -5% to +5% for the U.S. cyber market.

“While market stabilisation has continued through the first half of 2025, carriers are aiming for flat rates on all layers given rate decreases over the past 18 months. There continues to be intense competition between cyber markets looking to retain their renewals and meet aggressive growth goals,” the report said.

Willis said that it is seeing flat primary and excess cyber renewals and that capacity continues to be readily available. The broker continued that premium stabilisation has continued through the first quarter of 2025, which has led to slight premium increases to follow clients’ revenues and exposures.

“It’s possible that we could see more significant premium increases toward the end of the year, as litigation that incepted at the end of 2022 and 2023 concludes,” the report said.

The strong competition between carriers means certain risks may receive multiple quotes, with incumbents eager to retain business.

Increased limit factors have come down in excess placements because of the intense competition, especially on large towers, where there have been significant premium decreases.

“Capacity is plentiful in the market, partially thanks to new facilities able to provide significant excess capacity with flexibility to be deployed anywhere on a program above the primary layer,” said the report. “We’re seeing carriers more willing to underwrite to the gray area between yes/no within the applications.”

Willis in its report said the fourth quarter of 2024 saw a significant decrease in median ransomware payments, but added “other data suggests that we shouldn’t expect a drastic slow down”.

The broker said that markets continue to grapple with how to address claims and losses stemming from wrongful collection, the use of artificial intelligence and new SEC rules.

“There are a wide variety of approaches to wrongful collection coverage, as markets assess how biometric information legislation, as well as chat bot and meta pixel litigation, increased exposure to certain organisations,” the report said.

Willis’ outlook for the cyber market follows cyber rates continuing to fall globally in the first quarter.

CAPACITY SHORTAGE NOT EXPECTED

Marsh in its Global Insurance Market Index released last month said that cyber insurance rates decreased 6% globally in the first quarter, with decreases in every region. That followed a 7% decline in the previous quarter, and 6% reductions in both Q3 2024 and Q2 2024.

“Insureds are increasingly taking a proactive approach to risk management and are often using premium savings to enhance their coverage, reduce retentions, and increase limits,” Marsh said.

In the U.S. cyber insurance rates decreased 4%, the eighth consecutive quarter of reductions. This was a declaration from 5% in Q4 2024, which compared with 4% in Q3 2024.

“Cyber insurance capacity increased, with several new insurers and additional facilities joining the market. A capacity shortage is not expected in the near term,” Marsh said.

The broker highlighted that generative AI continued to emerge as a concern, with its ability to amplify existing cyber risks, leading to potential consequences including business interruptions from AI system failures, wire transfer fraud from hyper-realistic deepfakes, and inadvertent copyright infringements.

In the UK, cyber insurance rates decreased 8%, with 78% of cyber clients receiving rate reductions as insurer competition increased and 26% of clients opted to add to their limits.

Latin America and Caribbean cyber insurance rates declined 6% in Q1, with the largest reductions in Mexico, Brazil, and Colombia, where rates fell between 8% and 10%. In markets like Peru, Chile, and Argentina, pricing reductions were generally lower.

Reductions of 30% to 45% were noted for buyers with exceptional cybersecurity controls.

“Cyber renewals typically saw broader terms and the removal of ransomware-related restrictions,” Marsh said.

Europe cyber insurance rates decreased 10% in Q1, with the middle market becoming significantly more competitive because of increased capacity.

“Insurers have set high growth targets, and capacity per layer continued to increase,” Marsh said. “Clients trended toward purchasing higher limits as they benefitted from favorable market conditions.”

The broker added that restrictions often were eliminated, and insurers broadened coverage with additional industry-specific extensions and innovative solutions.

Asia cyber insurance rates decreased 8% in Q1 driven by heightened insurer competition, fueled by new entries into the market and increased capacity from existing players.

Canada cyber insurance rates decreased 6% as capacity continued to increase. Lower excess layer rates contributed to overall program savings; reductions of 3% to 10% were common when primary layers renewed flat.

India, Middle East, and Africa cyber insurance rates decreased 8% in Q1.

The Middle East experienced declines of 15% to 20% and higher, India remained stable, and South Africa saw slight increases in the range of 5% to 10%.

“There was also an influx of new capacity, particularly in excess and primary layers,” said Marsh. “In the Middle East, increased capacity was driven by new entrants, competition among insurers, and aggressive pricing. Insurers in India and South Africa were more cautious.”