Reinsurance broker Gallagher Re recently launched its Cyber Risk Adjusted Rating (RAR) Index, revealing that its value was 100% higher on January 1st, 2025, compared to January 1st 2020, indicating higher rates-on-line, as the cyber market continues to grow amid an evolving risk landscape.
For those unaware, the Gallagher Re Cyber Risk Adjusted Rating (RAR) Index is a measure of the change in reinsurance prices, adjusted for expected changes to the underlying level of risk.
Moreover, the Cyber RAR Index value saw a notable increase of 62% from 2020 to 2021, which was then followed by a slightly higher growth of 63% between 2021 and 2022, reflecting the higher costs of cyber reinsurance at the time.
From 2022 to 2023, the growth rate slowed considerably to 16%, before shifting downward.
Then, from 2023 to 2024, the Index value declined by 16%, and the downward trend continued into 2024 to 2025, with a further decrease of 22%.
As mentioned, the Cyber RAR Index was 100% higher on January 1st 2025, compared to January 1st 2020, however it was 34% lower than its peak on January 1st 2023.
Ian Newman, Global Head of Cyber, commented: “While it has performed well in recent years, the cyber market continues to grow and the risk landscape is evolving rapidly. Cyber is also a CAT and systemically exposed class and reinsurance buyers are constantly looking for suitable and effectively priced non-proportional protection.”
“Gallagher Re therefore believe that over the long-term, an index of the Cyber Aggregate Excess of Loss market will provide a useful and insightful barometer as to the state of the cyber reinsurance rating environment,” he added.
According to Gallagher Re, Aggregate Stop-Loss and Aggregate Excess of Loss structures have remained the preferred solutions since 2015, due to their ability to cover systemic cyber events, loss frequency trends, and adverse developments such as the rise in ransomware between 2018–2021.
It’s also important to remember that the catastrophe bond market is now open to well-structured cyber risks in excess-of-loss cat bond format, which is still a very small piece of the overall cat bond market but expected to expand.
Since their introduction to the insurance-linked-securities (ILS) market in 2023, we have so far seen 10 cyber cat bonds issued.
You can read about every cyber cat bond transaction, including the first private cat bond deals and the more recent 144A cyber cat bonds, by filtering our Deal Directory by peril to view only cyber cat bond transactions.
