MediumVII Reinsurance & Specialty Risk5 November 2026, Thursday
Howden Re says the fall in US cyber pricing is slowing
Howden Re wrote on 5 November that US cyber insurance pricing has fallen 9.7% since early 2024, and 24.5% outside the US. In its fourth year the decline is slowing; over the same period newly identified vulnerabilities rose 105%.
Howden Re had forecast a risk-adjusted rate change of −4.9% for 2026; the outcome was −5.4%. The risk-adjusted rate change strips out differences in cover and retentions, and the −5.4% is measured on that basis. In 2023–2025 the gap between forecast and outcome had exceeded 8 points; Luke Foord-Kelcey, the firm's head of cyber, reads the convergence as a sign that the market is stabilising.
Reinsurance capacity remains plentiful. On quota share treaties incepting on 1 July, the weighted ceding commission fell 1.5 points to 47.1%; Howden Re expects the trend to reverse in 2027. On mid-year aggregate stop-loss covers, attachment points fell 8 points to 108% of the underlying limit, and rate on line slipped to 7.23%.
The constraint is building on the loss and accumulation side. In January–September 2026 new vulnerabilities rose 105%, as AI tools accelerated detection. Those actually exploited stayed below 0.5% of the total. US portfolios from the 2023 underwriting year are a focus for reinsurers because third-party claims are developing slowly, and privacy litigation is reaching small businesses.
The 10 largest reinsurers supply about 87% of capacity. Under its Cygenesis framework in May 2026, Howden Re wrote that a mid-sized cyber event of the kind seen once every 10–18 years could turn the direction of pricing. Today the price of cyber cover is set not by abundant capacity but by the loss view of a narrow group of 10 reinsurers.
Talay assessment
Bottom line
The fall in US cyber pricing has slowed to −5.4% and the forecasting error has narrowed; the market is nearing the end of its softening. The insurability limit of cyber cover is set by losses, not price: vulnerabilities are up 105% and capacity is concentrated in 10 reinsurers. The most likely path is flat pricing and rising ceding commissions in 2027.
Likely effects
- Cyber reinsuranceUncertain1–6 months
A rise in quota share ceding commissions in 2027 would show insurers struggling to retain cyber risk on balance sheet; demand for reinsurance grows.
- Corporate cyber costsNegative1–6 months
As price declines slow, companies' savings on cyber policies come to an end; privacy litigation risk for small businesses pushes costs up.
- Capacity concentrationNegative6 months+
With 87% of capacity in 10 reinsurers, a single mid-sized event could turn pricing across the whole market.
Possibilities, ranked
- 1Flat stabilisation55%
US cyber renews close to flat in 2027, and ceding commissions begin to rise.
Watch: Risk-adjusted rate change on cyber aggregate stop-loss in January 2027 broker reports
- 2Softening continues30%
Abundant capacity pushes prices down by around 5% again in 2027, and ceding commissions keep falling.
Watch: The risk-adjusted rate change in Howden Re's 2027 mid-year report
- 3An event turns pricing15%
A mid-sized cyber event turns prices upward in early 2027, and capacity tightens.
Watch: A single cyber event with insured losses above $1 billion
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- US cyber pricing (since 2024)▼ −9.7%
- New vulnerabilities▼ +105%
- Treaty ceding commission▼ 47.1%