Just when brokers thought the cyber market couldn’t get any more unpredictable, a new twist has emerged: falling cyber insurance premiums, even as attacks hit unprecedented highs. For years, rising ransomware claims and data breaches drove up rates and tightened capacity. Now, insurers are slashing premiums and broadening terms – even as cyber criminals grow bolder and more sophisticated.
Insurance Business asked local cyber specialists to explain this anomaly and what it means for the future of cyber resilience and insurance profitability. One broker pointed to simple economics: a low claims ratio is increasing capacity as markets chase return on investment (ROI). According to industry reports, including Aon’s July cyber market update, despite some recent deterioration in loss ratios, cyber insurers are still enjoying a very healthy 50 points of margin.
This helps explain the stiff competition for business that’s still driving insurance rates down in New Zealand and elsewhere. “In our region, capacity is still really abundant and the international insurers are wanting to target risks in the region to diversify their portfolios,” said Jono Soo (pictured left), head of cyber for Marsh in New Zealand. He added that this is the bottom-line explainer for all the “capacity competition” even as claims increase.
Other brokers point to the rapid growth in cyber uptake as sustaining this situation. “Globally, the uptake of cyber insurances is on the rise so anytime there's a market for premiums and premium pools, it's going to pique insurer interest,” said Decklyn Thomson (pictured centre), a commercial broker with GSI Insurance Partners. Thomson explained that the paradoxical situation of rising claims numbers and falling rates results from insurers wanting to remain involved and competitive in a growing market.
Yet this paradox is still a challenge to explain. “Anomaly is a great word because it is quite a hard one to articulate to clients,” said Damian Schade (pictured right), client director of professional and financial risks at Lockton. Schade noted insurer meetings highlighting rising cyber claims and the dramatic attack events reported in the media. “But there's still more competitors coming into the market and insurers are still trying to drive the premium down,” he said.
Schade warned that this contradictory situation can only make economic sense for insurers for so long. “It doesn't make a lot of sense from a commercial point of view,” he said. “I think we're certainly seeing, globally, some of the rates start to slow a little bit.”
Local colleagues agree, seeing the current situation as a cyber market turning point. Some expect rates to start flattening soon, with an upward trajectory on premiums possibly starting by the end of the year. “I think we're at a bit of a crux or inflection point of the market,” said Soo.
The paradox cannot be understood without acknowledging the evolving claims environment. New Zealand has seen an uptick in ransomware, business email compromise, and data breach incidents over the past 18 months, mirroring global trends. While these events are driving higher claim volumes, insurers have built stronger risk assessment and policy frameworks, partly supported by richer claims data and more rigorous regulatory expectations.
The Reserve Bank of New Zealand and the Financial Markets Authority have issued guidance emphasizing cyber risk management and reporting, making it increasingly important for businesses to demonstrate robust cyber hygiene to qualify for coverage. This, brokers argue, has helped sustain market confidence while allowing insurers to price premiums more competitively.
Soo sees dropping premium prices – even as attacks increase – as a positive signal of market strength. “Claims are obviously coming in and testing policies - as they should be,” he said. “It's really nice to see that policies are responding as they are expected to.”
Thomson highlighted how richer claims data over recent years has allowed insurers to better understand risk and implement more sustainable pricing models. “In terms of claims over the last few years, the insurers have more claims data now than they have ever had,” he said. This preparation means the market isn’t reacting with the volatility seen in 2020 and 2021. “So as things do inevitably turn and harden again, we likely won't see the volatility that we saw a few years ago - something we all want to avoid,” said Soo.
The New Zealand cyber insurance market is at a critical juncture. While falling premiums may seem counterintuitive given rising incidents, the combination of abundant capacity, growing market uptake, and improved risk insight is creating a temporarily stable environment. Brokers and insurers see this as an opportunity to strengthen cyber resilience, educate clients, and refine underwriting strategies ahead of a potential market correction.
