A Softening Cyber Market That Can’t Last and Why Today’s Conditions Set the Stage for Tomorrow’s Correction

On the surface, the cyber insurance market looks like a buyer’s market: premium levels are falling, policy terms are widening, and insurers are battling fiercely for new accounts. But we know from years of observing insurance cycles that periods of intense competition almost always precede sharp rate rebounds and tightened terms. And right now, many carriers are drifting away from underwriting discipline, discounting rates below actuarially supported levels, and accepting exposures that exceed their true risk appetite.

When the industry underprices risk, it eventually must overcorrect. Buyers who benefit from today’s generous terms may find themselves facing far higher costs, shrinking limits, or reduced coverage availability once the market recalibrates. What we’re seeing now isn’t just another soft phase; it’s a structural imbalance that becomes more dangerous the longer it persists.

Too Much Capital Can Be a Liability

The influx of capital into the cyber market has created the illusion of boundless capacity. While ample capital might seem like a positive development, it can actually undermine the very stability buyers depend on.

When insurers are sitting on surplus capital, competitive tension increases. Providers loosen underwriting standards, reduce pricing, and stretch to accommodate risks they haven’t fully assessed and/or are largely outside of the spirit of the policy intent. This is especially precarious in cyber, where actuarial modeling is challenged by limited historical data compared to other mature lines like D&O or property.

Without decades of long-tail loss information, decisions are being propped up by temporary capital, not sustainable economics.

Instead of competing on service quality, claims responsiveness, or holistic risk management, many carriers are turning to tactics that ultimately weaken their own offerings. We’re seeing insurers strip out key exclusions or offer broader limits than their pricing models justify, all to win business. When carriers take on unpriced or underpriced risk, they’re gambling with reserves and policyholder security, undermining the fundamentals of risk transfer and eventually forcing them to draw from capital pools not intended for these exposures.

Coverage Creep: Silent Expansion, Hidden Problems

A notable trend is the expansion of cyber policies into areas traditionally insured elsewhere. As other commercial lines push cyber-related exposures out of their own products, those risks are migrating into cyber forms, often without the accompanying underwriting rigor or pricing adjustments.

Coverage for pollution-related events influenced by cyber triggers, bodily injury scenarios, property impacts, and an array of media liabilities are being absorbed into cyber contracts. While buyers may appreciate the appearance of broader protection, the reality is more complicated. Unchecked coverage creep introduces hidden liabilities that may only surface when a claim reveals that pricing and risk evaluation didn’t match what was actually being insured.

This creates a false sense of certainty for buyers and threatens the insurer’s ability to respond as expected when a complex loss occurs.

Underpriced Risk and Market Strain

When premiums flatten or fall even as exposures grow and cyber threats increase, actuarial logic is being overshadowed by competitive pressure. Underpriced risk inevitably leads to financial strain, and with forecasts pointing to significant growth in cyber insurance demand over the next several years, the industry must preserve the capacity needed to support that expansion. If current pricing and expansion trends continue, capacity will contract and the market will harden quickly.

Choosing Partners for the Long Term

Soft markets always correct. What matters now is how buyers are preparing for that shift.

Too many buyers overlook the distinction between a low premium and a high-value insurance partnership. True value comes from partnering with providers that maintain strong balance sheets, demonstrate consistent claims performance, and understand the complexities of cyber risk. It’s also crucial to work with insurers willing to adjust pricing based on your organization’s actual risk profile, giving you deeper visibility into your exposures and incentivizing continuous improvement. Providers that understand the importance of providing mitigation tools that benefit the insured and the loss ratio show real maturity and partnership in a challenging risk arena.

Insurance isn’t a commodity. It’s the expertise behind the policy, the quality of risk engineering, and the claims response that shows up when your organization is under pressure.

Rates will rise. Terms will narrow. Capacity will tighten. Organizations that prioritize resilience and long-term partnerships over rate optimization today will be better positioned when the market turns.

Meet the Author

Maria Long, Chief Underwriting Officer

Resilience

Maria Long is Chief Underwriting Officer for Resilience where she holds global responsibility for underwriting strategy, policy, and risk assessment. With over 10 years dedicated specifically to cyber insurance in her nearly twenty-year career in the industry, Maria brings a wealth of experience to her role at Resilience. Before joining Resilience, Long held leadership positions in cyber underwriting and risk management for Munich Re Specialty, where she was responsible for building, launching, and leading their cyber risk management program. She also supported strategic initiatives for application across their Cyber and Tech E&O book of business, supporting growth into new industry verticals. Previously, Long spent over eight years at Allied World, where she led and evolved an industry-leading cyber risk management platform to mitigate risk and attract cyber insureds. She holds a master’s degree from Purdue University in communications and leadership.