Luke Foord-Kelcey, Global Head of Cyber, Howden Re, commented, “Cyber is maturing into a distinct asset class with diversified reinsurance product offerings. Cedents must continue to evaluate reinsurance purchasing strategies critically and holistically, ensuring alignment with risk tolerances and broader portfolio objectives, to maximise risk transfer efficiency”
Howden Re, the global reinsurance, capital markets and strategic advisory division of Howden, the global insurance intermediary group, has published a reinsurance industry cyber report, Into the Cyberverse.
The report offers critical insights into today’s cyber risk transfer ecosystem, evaluating how losses move through the market in aggregate, and stress-testing whether current trends can sustainably support future growth.
Luke Foord-Kelcey, Global Head of Cyber, Howden Re commented: “Cyber is maturing into a distinct asset class with diversified reinsurance product offerings. This report reflects the growing confidence of cyber reinsurance buyers and sellers in managing systemic cyber risk. Cedents must nevertheless continue to evaluate reinsurance purchasing strategies critically and holistically, ensuring alignment with risk tolerances and broader portfolio objectives, to maximise risk transfer efficiency.”
David Flandro, Head of Strategic Advisory, Howden Re, said, “Into the Cyberverse makes plain that tomorrow’s cyber market will be powered as much by insight as by capital. Robust models, richer data and advanced analytics are the engines that will unlock fresh capacity, attract new participants and contain accumulation risk. By stress-testing programmes through both probabilistic and fixed-attrition lenses, our analysis pinpoints where volatility truly resides and shows how innovative structures can keep growth on a sustainable footing.”
Into the Cyberverse applies multiple assessment methodologies, both fully probabilistic and fixed attrition, to its analysis, and finds that to ensure a scalable cyber future, the industry must prioritise vendor model advancements, reinsurance product innovation and continued investment in cyber analytics. These efforts will be crucial to optimise reinsurance placement in an evolving risk landscape.
The analysis highlights the role of cyber reinsurance products, noting that performance hinges on structure and carrier-specific purchasing strategies. As buyer behaviour shifts and market losses increase, reinsurers’ risk tolerances will be stressed, creating additional demand for retrocession capacity.
Report highlights:
Into the Cyberverse contains three sections that analyse current trends and consider a hypothetical future, identifying constraints and offering solutions to support stable market development and resilience.
Visualising the 2025 cyber market ecosystem
The cyber reinsurance landscape today features an increasing array of product offerings and growing comfort with the underlying risk profile, but reinsurer market share concentrations remain high: the top five cyber reinsurers comprise 62% of cyber gross written premium (GWP), rising to 87% for the top ten, according to Howden Re estimates. Therefore, diversification is necessary for cyber to take its place alongside more established classes.
At the same time, recent decreases in average quota share cessions – from 57% five years ago to 45% today – have shifted market dynamics as non-proportional cover becomes more cost effective for targeted tail-risk transfer.
As the market grows and tail losses increasingly flow through the ecosystem, this trend is expected to accelerate. Consequently, additional retrocession capacity will be essential to mitigate volatility as more non-proportional risk accumulates on reinsurers’ books.
Who owns the tail?
Cyber catastrophe protection is essential but complex, as cyber risk is more difficult to quantify and define than other established risk classes. The report delves into the cyber tail, evaluating whether insurers or reinsurers assume the majority of losses in aggregate.
The analyses demonstrate that through a fully probabilistic lens, insurers and reinsurers share the catastrophe burden up to the 1-in-200 year return period. Yet, from a fixed attrition perspective, insurers may not be receiving the intended benefit of some reinsurance products. Using both methodologies ultimately provides the most comprehensive assessment of structure efficiency.
Back to the future
Extrapolating current trends, the report envisages a future in which global cyber insurance premium roughly doubles to US$30 billion. In this scenario, the quota share market is proportionally smaller, with just 25% of premium ceded, compared with 32% today.
By contrast, the non-proportional market expands, absorbing 6.5% of premium, up from 4% today. A larger and more established cyber retrocession market becomes indispensable as losses cascade further up the chain: the reinsurance industry loss ratio for a 1-in-200 aggregate exceedance probability (AEP) event is projected at 326% compared to 272% today.
Product innovation, advancement in cyber model stability, and performance and investment in analytics capabilities are all needed to support these shifts.
The cyber (re)insurance market’s trajectory is unparalleled in both pace and complexity, requiring strategic adjustments to purchasing strategies, holistic approaches to loss transfer and diversification of market participants to realise its full potential.
Link to report: https://www.howdenre.com/sites/howdenre.howdenprod.com/files/2025-04/howdenre_into_the_cyberverse_report_april_2025.pdf