Howden Re publishes Cygenesis: a new framework for reading the cyber market cycle
Howden Re has released Cygenesis: Origins of cyber market cycles, its latest cyber reinsurance report and the first piece of research to examine property-catastrophe, D&O and capital markets cycles into a single framework for reading the cyber cycle. The report examines the forces shaping today’s softening market and identifies the conditions that could drive the next inflection point.
The cyber market has now entered its fourth consecutive year of rate softening. Anticipating what comes next requires more than monitoring cyber in isolation. It demands a framework that integrates threat intelligence, capital dynamics and evolving loss patterns. Cygenesis supports this thesis by drawing on analogues from property-catastrophe, D&O and capital markets to bring the cyber cycle into view through three distinct lenses: the drivers behind today’s soft market, the conditions under which cycles typically turn in more mature classes and the factors most likely to shape the next phase, including AI, the evolving nature of cyber losses and macroeconomic volatility.
“The cyber market is maturing rapidly, but despite growing up quickly, cyber remains a relatively new class, which is why cycle analysis is so valuable. Cedents need to consider a broader range of outcomes, from shock events to gradual loss accumulation and delayed claims emergence. Today’s picture is more nuanced: margin deterioration is playing out alongside a shifting threat landscape and evolving loss composition, so the signals of the next turn will be more challenging to read. Cygenesis provides a framework to assess these dynamics and position portfolios accordingly,” said Luke Foord-Kelcey, Global Head of Cyber, Howden Re.
Read the full report
Why expected growth has not materialised
Three structural drivers were widely expected to drive cyber market growth: tower expansion, international market diversification and SME penetration. In practice, none has scaled sufficiently to offset the increase in available capacity, resulting in excess supply and sustained downwards pricing pressure. In reality, tower sizes have remained broadly flat and the U.S. continues to account for a disproportionate share of global premium. Additionally, new capacity has intensified competition within existing segments, particularly in more price-sensitive areas of the market.
History rhymes: what other classes reveal about turning points
Drawing on analogues from property and D&O, the report finds that market turning points are rarely triggered by a single factor. A systemic cyber event comparable to a moderate property-catastrophe loss year could be sufficient to move the market; critically, a 1-in-200 year event is not required to do so.
Mapping historical property-catastrophe loss years onto the Howden Re CyberCube industry loss curve suggests an event with a return period of just 10 to 18 years, comparable to a moderate property-catastrophe year, such as 2008, could be enough to prompt a significant market response. Equally, the shift towards third-party and longer-tailed cyber losses may delay the visibility of underlying underwriting deterioration, extending the soft market even as performance erodes, a dynamic well documented in D&O.
The AI wildcard
Artificial intelligence has potential to reshape the threat landscape; currently this appears to be manifesting in an acceleration of established attack techniques, rather than in the introduction of novel attack methods. The early indicators, though still emerging, suggest that AI could drive a higher rate of vulnerability discovery and exploitation, and shorten the defensive window available to organisations. Open-source malware tags and CVE submissions have already increased materially, pointing to a more scalable and accessible threat environment. For the (re)insurance market, the more probable implication is not a step-change in individual event severity but a sustained increase in event frequency. In line with the dynamic observed in D&O, this suggests AI may reinforce a pattern of gradual performance erosion rather than triggering a single dislocating event.
A synthesis of perspectives
Cygenesis sets out forward-looking indicators covering vulnerability disclosures, malware propagation and AI-enabled fraud to help market participants identify inflection signals.
The cyber market sits at the intersection of event-driven, accumulation-driven and macro-driven dynamics. The relationship between performance and pricing is therefore non-linear, with market turning points emerging from the interaction of loss experience, capital conditions and claims development rather than any single trigger. For cedents and reinsurers, this points to a broader set of considerations when structuring protection. Reinsurance programmes designed with frequency and accumulation in mind, not only severity, may become increasingly relevant. At the same time, multi-year sources of capacity such as cyber catastrophe bonds, which lock in cover across contract cycles in a way that traditional reinsurance cannot, offer a degree of protection against the capital flight that tends to follow significant market losses. The broader macroeconomic backdrop is also distinct from previous soft-market phases: elevated interest rates and ongoing geoeconomic uncertainty may support a higher structural pricing floor than previously observed.
David Flandro, Head of Industry Analysis and Strategic Advisory, Howden Re, concluded, “Cyber occupies a distinctive place within the broader (re)insurance cycle. As a young class, it remains more exposed to evolving, idiosyncratic risks – from changes in the threat landscape to shifts in loss composition – while at the same time being increasingly influenced by the same macroeconomic and capital dynamics that shape more established lines. Cygenesis highlights a framework in which these forces are not static; their relative importance changes over time, making the cycle inherently more complex and less linear. Rather than pointing to a single trigger, the framework is intended to help market participants interpret how loss development, capital conditions and external volatility interact, and to navigate a wider range of potential outcomes as a result”
The report has been released following the 3rd annual Cyber Reinsurance Summit, hosted by Howden Re at Ascot Racecourse. Opened by Dominic Collins, Executive Chairman of the Howden group, and Luke Foord-Kelcey, the day brought together clients, carriers and industry specialists for a day of insight, debate, challenge and collaboration, anchored in the findings of the report. Across all keynote, presentation and panel sessions, a consistent message emerged: the market is shifting again—but the drivers for Cyber are both unique and complex.
Earlier last week, Howden Re announced the expansion of its Cyber team with five new appointments. These include Michael Giuliano, who has joined as the team’s first North America based Director, and Ram Ramakrishnan, who joined as Director to lead the cyber actuarial function, further strengthening the team’s actuarial capability and supporting its leading modelling and threat intelligence functions.