Cyber premiums fall as Lockton flags 2027 volatility risk

Cyber insurance premiums have continued to fall across Lockton's portfolio, despite a rise in incidents and more frequent large cyber events, according to a market update from the broker.

Lockton reported an 11% reduction in premiums across its cyber insurance book and expects a buyers' market through 2025 and 2026, with competition among insurers keeping pricing "historically competitive".

However, the broker warned that profitability pressures tied to older claims could increase the risk of renewed volatility in cyber insurance pricing in 2027.

Rates and risk

Cyber risk remains a board-level concern as attacks proliferate and criminals target supply chains, cloud services and credentials. The cyber insurance market has also matured, with insurers refining coverage terms and buyers becoming more familiar with requirements around security controls and incident response.

Lockton described current conditions as a continuation of the softer phase that followed a sharp repricing earlier in the decade. That shift came as insurers responded to rising ransomware activity and large losses with tighter underwriting and rapid premium increases.

Carlo Ramadoro, Head of Cyber and Technology at Lockton, said the current period looks different from the start of the decade, when some buyers faced steep rises.

"Cyber insurance continues to favour buyers in 2025 and 2026, unlike at the turn of the decade when sharp price increases saw rates double overnight. Choice and competition mean premiums remain historically competitive, even as incidents rise, coverage diversifies, and large cyber events become increasingly frequent and severe."

Claims pressure

Insurers track profitability over multiple years because cyber claims can take time to develop and settle. Large events can also drive losses beyond the initial incident response through business interruption, regulatory action and third-party litigation. This can affect pricing as underwriters reassess assumptions about frequency and severity.

Lockton pointed to historic claims as a key variable for the next phase of the market, particularly in the US, where litigation and settlement dynamics can influence the ultimate cost of cyber events.

"But this stability may not last. Historic claims, especially in the US, could challenge the market as losses from earlier years in 2023 and 2024 accumulate. This could put pressure on insurer profitability and raise the risk of renewed pricing swings in 2027. However, any correction is unlikely to be as severe as in 2020."

The warning reflects a broader concern that a cluster of large losses can shift market sentiment quickly. Even in competitive conditions, insurers may respond to deteriorating results by reducing capacity, tightening terms, or increasing retentions and deductibles. Buyers may also see changes in how insurers assess exposures such as ransomware extortion, third-party service provider incidents, and systemic events.

Buying decisions

For risk managers, lower premiums alongside ongoing incident activity create a mixed picture. Reduced pricing can create an opportunity to revisit coverage structure, consider higher limits, and review policy wording. Organisations also face a shifting regulatory and reporting landscape, which can affect cyber incident costs and claims patterns.

Lockton encouraged both first-time buyers and existing policyholders to use current conditions to negotiate terms and review limits.

"Now remains an opportune time to purchase Cyber Insurance. First-time buyers should be able to negotiate strong terms and conditions, and for existing buyers, it is a sensible moment to review and stress-test limits of liability."

Looking ahead, Lockton expects the near-term market to remain favourable for buyers, but says insurers will focus closely on loss development from earlier underwriting years as they set pricing and terms for future renewals.