Ample capacity and sustained competitive pricing will characterise the cyber reinsurance market, but the core discussion is shifting from sheer volume to strategic deployment, Daniel Carr, Head of Cyber Underwriting at Ariel Re, stated in a recent interview with Reinsurance News.
According to Carr, as the reinsurance industry meets at Rendez-Vous de Septembre (RVS) 2026 in Monte Carlo, the question for the market is no longer how much capacity exists, but where along the loss distribution cedents choose to deploy it.
“Capacity remains ample, and in the near term we would expect the market to remain competitive. But the more interesting development is how insurers are beginning to think about the risk they want reinsurance capital to absorb,” he explained.
Adding: “The underlying cyber risk landscape is changing at the same time as primary market pricing remains competitive. Insurers are increasingly taking note of the potential for greater dependency, aggregation and volatility within their portfolios, while also reassessing the economics of transferring more predictable attritional exposure.
“That should increasingly influence purchasing behaviour. We expect the discussion to move beyond simply how much cyber reinsurance is available towards how cedents allocate that capacity across the loss distribution.”
This reassessment is driving a shift in buyer behaviour ahead of the January 1, 2027, renewals, where Carr anticipates a “more deliberate approach” centered on structure, attachment, and event definition rather than a dramatic pricing shift.
“Cedents are increasingly having to balance competitive conditions in the primary market with an underlying risk landscape that is becoming more interconnected, more dependent on shared technology, and potentially more volatile. That should drive greater scrutiny of what risk is retained and what is transferred,” Carr stated.
He continued: “We therefore expect more focus on structure, attachment and event response. In particular, there is likely to be growing interest in non-proportional, aggregate and catastrophe-oriented protection, as insurers look to retain more predictable attritional exposure while using reinsurance capital against the parts of the portfolio that are harder to diversify internally.”
Growing AI adoption could also significantly affect attritional loss experience, making this more than an either or decision, the executive noted, advising that cedents must balance retained and transferred risk based on their evolving view of the threat landscape and portfolio impact.
Additionally, Ariel Re anticipates greater emphasis on accumulation and common-cause losses. As cyber risk becomes inherently systemic, clear event definitions and effective protection against clustered losses will be critical.
“The most important trend is that cyber risk is becoming increasingly systemic by construction. Organisations are adding more critical technology dependencies, while common infrastructure across cloud, identity, software supply chains, and increasingly AI creates more potential points of correlated failure. The result is a risk ecosystem that is more interconnected, more concentrated and more capable of producing clustered losses driven by third-party activity,” Carr stated.
He emphasised that AI, specifically, is accelerating that change in two ways. First, rapid adoption driven by competitive pressure is expected to create near-term volatility in technology risk governance.
Secondly, AI is changing threat capability. Although attackers and defenders will eventually reach a new baseline, the transition will not be smooth, according to Carr.
Machines operate with speed and persistence that human adversaries cannot sustain in the same way, which means historical threat models are undesirable. This shift in timing, persistence, concentration, and systemic risk propagation is central to Ariel Re’s underwriting thesis.
Carr said: “For us, the key point is that systemic cyber risk is increasingly a feature of the wider technology ecosystem, rather than solely the risk management of an individual insured. Strong controls remain fundamental to attritional performance, but catastrophe risk is increasingly driven by common causes and shared dependencies across multiple organisations.
“That is exactly the type of risk we have focused on for a long time – understanding how individual exposures aggregate, how dependencies transmit loss across a portfolio, and providing catastrophe solutions against that tail. As those characteristics evolve, we are also beginning to see greater differentiation in reinsurance appetite and in the structures being used to manage the risk.”
As tail risk expands, Carr remains positive on the growth of cyber insurance-linked securities (ILS), including standalone cyber catastrophe bonds and multi-peril cat structures.
“We remain constructive on the outlook for alternative capital in cyber. As cyber portfolios grow and the risk becomes increasingly characterised by accumulation, common dependencies and potentially systemic loss, we think alternative capital will become a more important part of the overall capacity landscape.”
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