Fitch Ratings: US cyber DWP dropped 6% in 2024 amid weaker pricing and fewer policies

By Mia MacGregor

May 21 - (The Insurer) - U.S. direct cyber written premiums fell by 6% in 2024 due to weaker pricing and fewer policies, while the top five U.S. cyber insurers maintained a combined market share of 31%, according to a recent report from Fitch Ratings.

Fitch's U.S. Cyber Insurance Monitor May 2025 report attributes the decline to a softer rate environment, fewer policies in force, larger companies opting for higher deductibles and inconsistencies in data reporting.

Despite the shrinking premiums, Fitch noted that profitability remained strong, with the sector posting an underwriting profit for the third consecutive year and a direct loss plus defense and cost containment ratio of 47%.

Additionally, the report noted that market concentration has diluted as more insurers enter the cyber market, attracted by long-term growth opportunities.

The top 10 U.S. cyber insurers held a 51% market share at year-end 2024, down from 69% in 2019, although their year-over-year aggregate share remains stable.

In 2024, 22 organizations reported writing over $100 million in direct cyber premiums, while 40 reported over $25 million.

Marsh’s Global Insurance Market Index showed a decline in cyber policy renewal prices over the past four quarters, including a 5% drop in Q4 2024, from a peak of 130% in Q4 2021.

While Fitch noted that demand for coverage and premium volume generally rises alongside policy numbers, 2024 had a 2% decline in outstanding policies. Endorsement policies accounted for the largest share of outstanding policies at 56%, followed by primary policies at 41% and excess policies at 3%.

The report also noted a 60% increase in reported claims volume, with a 1% rise in frequency. While together this could imply a troubling future for potential claims activity, Fitch stated that it is important to point out that reported claims do not equate to closed claim with indemnity payments.

Closed claims with indemnity payments dropped to 26% in 2024 from 35% in 2023, although average payments increased to $246,000 from $173,000 in 2023.

Fitch highlighted that cyber incident and claims reporting practices will be increasingly influenced by regulatory and compliance requirements, with organizations facing potential fines for failing to report breaches promptly.

“It is clear that cyber risk will continue to grow, and cyber insurance will grow as well. However, the linkage will not be perfectly correlated,” the report stated.

“In particular, insurance companies still have to demonstrate the value proposition of a policy to justify uptake by small-to-medium sized organizations that have limited budgets.”