How U.S. hardening cyber insurance market affects other global markets

The U.S. cyber insurance industry is entering into a hardening market phase, which is impacting other markets outside Canada’s southern neighbour, a CFC cyber expert said last week during a webinar.

It’s difficult to talk about the cyber market as if it’s one cohesive ecosystem anymore, says James Burns, CFC’s global head of cyber. The industry has matured and developed into distinct markets in each territory in which CFC operates, including the United Kingdom, U.S., Canada and Australia, among others.

“But there is a definite distinction to be made between what’s happening, I think, in the U.S. market and what’s happening outside of the U.S. market,” Burns says during CFC’s webinar, The inside cyber scoop: What brokers need to know in 2026. “What’s happening there [in the U.S.] is directly affecting what’s happening in the rest of the world.”

For one, the U.S. market is still hyper-competitive, Burns says. He says he’s heard 200 insurers or MGAs are providing cyber insurance in the U.S., but “based on the feedback that I’ve had, I think the true number is more like 80 markets that the U.S. brokers are actively using in a meaningful way.

“But that’s still incredibly high, and it’s created sustained downward pressure on cyber rates for two-and-a-half years now,” Burns adds. “At the same time, cyber loss activity has ticked up, which means that U.S. cyber portfolios have been getting less and less profitable, to the point now where the U.S. market as a whole has likely moved into unprofitable territory.”

Burns says the industry has started to see rates rise in the U.S., particularly for more established markets with large renewal books. At the same time, there’s been an abundance of capacity competing for new business. “So, we’re not quite in hard market territory yet, but there’s lots of people who sense that that’s coming.”

Moving into other territories

How does this dynamic impact non-U.S. markets?

Insurers and MGAs that have been playing in the U.S. market have been actively moving into other territories, particularly in the U.K., Australia and Europe, Burns says.

“And they’ve been doing that to access new markets where pricing has been less driven down by the hyper-competitive environment that we’ve seen in the U.S.,” he says. “And the irony of that, of course, is that those markets are now becoming more competitive, and they’re starting to soften at a slightly quicker rate as well.”

The upside is that cyber books in the U.K., Australia and Europe are generally more profitable, and those markets also have lower cyber penetration rates, particularly in the small- and medium-sized enterprise space. The same could be said of the Canadian cyber market. “The product is becoming more accessible to non-buyers, because the price point has been decreasing, and what we have seen is that this is helping to drive growth, drive demand,” Burns says.

He identifies three trends most influencing cyber market pricing right now: capacity, competition and claims.

Reinsurance capacity is at an all-time high. Over the past few years, that has fuelled new cyber MGAs, new Lloyd’s syndicates writing cyber (or new cyber teams within existing Lloyd’s syndicates), and new cyber teams at insurers who weren’t previously writing cyber, Burns says.

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The greater the availability of capacity or supply, the greater the downward pressure on pricing. Abundant reinsurance capacity also means there are more reinsurance products onto which cyber insurers can transfer perceived systemic event exposure, Burns says.

Since there’s abundant capacity supplying competitive players, more markets are offering cyber insurance than a few years ago. These markets compete with each other to win business, which has driven new product innovations and improvements to services available within the cyber policy. “But it’s also driven down price, and it’s one of the biggest influences that we are seeing on pricing — those competition levels,” Burns says.

A counterbalance to this is claims: cyber claims activity has increased over the past year. “In the U.S., where it’s starting to lead to a response through rate rises, but also outside of the U.S., where I think it acts as a bit of a break on rate softening that we’re seeing in other, more profitable territories.”

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.