Rapid changes in cyber threat activity are now driving rates more than long-term loss trends. This is due in part to two factors: the changing risk landscape and the lack of long-term historical loss data.
We’ve been seeing a shift towards this reactionary approach since the boon of ransomware, which according to Munich Re, accounted for more than half of all cyber claims in 2024.
And, with cyber threat actors and criminals utilising AI and exploiting its vulnerabilities, the attack surface and threat continue to grow. Cyber insecurity is identified as a top-10 risk in both short-term and long-term rankings in the Global Risks Report 2026.
In addition, cyber risk relating to the new vulnerabilities associated with frontier technologies and digital expansion was ranked a top concern for risk leaders in AON’s 2025 Global Risk Management Survey.
These types of shifts are signalling a migration away from cyclical approaches to volatility. By the very nature of cyber and the constantly evolving digital space, we’re seeing the advent of structural volatility. The cyber threat mutates and expands as the digital space and Fourth Industrial Revolution grows and evolves. In turn, insurers are expected to be agile and provide a new pattern of short-term rating, ready to respond as threats take new courses.
Claims Are Rising, yet Rates Are Declining
These changes in approach are happening against a backdrop of rate cuts for cyber risk, due to increased capacity in the market. In the London Market alone, we’ve seen the number of insurers underwriting cyber leap from 25 to 45 in the space of five years.
According to Lockton, premiums fell by 11% on average in 2025, and coverage broadened. This was despite unprecedented levels of cyber incidents. Claims severity intensified over the period due to major ransomware payouts, and they continue to trend materially worse year on year.
This indicates a rare phenomenon where risk and pricing are diverging, a scenario that will likely lead to leaner profit margins in a key growth market.
Using Advanced Analytics to Build Cyber Resilience
According to AON, risk leaders within leading organisations are using enhanced analytics to hone their decision making and build sustainable, scalable cyber resilience. Brokers are helping them align their insurance programs with their identified risk tolerance. To achieve this, they’re stepping beyond traditional benchmarking.
The ability to price cyber risk in an agile fashion will soon be a necessity. Elevating this capability to real-time pricing and rating could prove a key competitive advantage.