Howden Re, the reinsurance arm of Howden Group, has released Cygenesis: The origins of the Internet market cyclea new report examines how different insurance and capital market cycles can be combined into a framework to understand cyber markets.
The research explores the influencing factors shaping the current soft market and outlines the conditions that could lead to future turning points. The entire analysis is provided by Howden Re.
Howden Re said the cyber insurance market is now in its fourth consecutive year of softening rates. Anticipating future developments requires a broader approach that does not assess cyber risk in isolation but instead integrates threat intelligence, capital flows and changing loss patterns, the company said.
Through its Cygenesis framework, Howden Re compares real estate catastrophes, directors and officers (D&O) liability and capital markets to examine the drivers behind current pricing conditions, the triggers that have historically changed more mature markets and factors that may influence the next phase, including artificial intelligence, changing loss trends and macroeconomic conditions.
Luke Foord-Kelcey, global head of networking at Howden Re, commented: “The networking market is maturing rapidly, but despite rapid growth, networking is still a relatively new category, which is why cycle analysis is so valuable. Cedents need to consider the wider consequences, from shock events to gradual accumulation of losses and delayed claims emergence.
“Today’s picture is more nuanced: deteriorating margins are accompanied by an evolving threat landscape and an evolving loss mix, so signals of the next turning point will be more difficult to decipher. Cygenesis provides a framework to assess these dynamics and position portfolios accordingly.”
Howden Re reported that previously expected growth drivers, including higher insurance limits, international expansion and stronger uptake by small and medium-sized enterprises, did not reach the scale expected. As a result, capacity increases exceed demand, resulting in continued downward pressure on prices.
The company noted that policy constraints have remained broadly stable, the U.S. continues to dominate global premium share, and additional capacity intensifies competition in existing segments rather than expanding the overall market.
Through historical comparisons, Howden Re found that market turning points are rarely driven by a single factor. The report suggests that a cyber event comparable to a moderate real estate disaster year could be enough to change pricing conditions without requiring extreme low-frequency loss scenarios.
At the same time, Howden Re highlighted that the growing share of third-party and long-tail cyber losses could delay recognition of deterioration in underwriting performance, potentially prolonging the current soft market even as profitability weakens.
Howden Re sees artificial intelligence as an emerging influence on the threat landscape. The company observed that AI is currently accelerating existing attack methods rather than introducing entirely new ones, with early indicators pointing to an increase in vulnerability discovery and exploitation.
This could lead to a higher frequency of cyber incidents rather than a significant increase in the severity of individual incidents, reinforcing a pattern of gradual erosion of performance rather than sudden market shocks, the report said.
Howden Re concluded that network markets operate at the intersection of event-driven, accumulation-driven and macroeconomic forces, making pricing behavior less linear than in more established categories.
Reinsurance structures may increasingly need to consider frequency and cumulative risk as well as severity, while multi-year capital solutions such as cyber catastrophe bonds can provide greater stability throughout market cycles, the company said.
It also noted that current macroeconomic conditions, including higher interest rates and geopolitical uncertainty, may support higher pricing benchmarks than in previous periods of weak markets.
David Flandro, head of industry analysis and strategic consulting at Howden Re, added: “Cyber occupies a unique position in the wider re/insurance cycle. As a younger segment, it remains more exposed to evolving idiosyncratic risks – from changes in the threat landscape to changes in loss composition – while being increasingly influenced by the same macroeconomic and capital dynamics that shape more mature product lines.
“Cygenesis highlights a framework in which these forces are not static; their relative importance changes over time, making cycles inherently more complex and less linear. Rather than pointing to a single trigger, the framework is designed to help market participants explain how loss developments, capital conditions and external fluctuations interact, and therefore guide a wider range of potential outcomes.”
Howden Re released the report following its third annual Cyber Reinsurance Summit at Ascot Racecourse, where industry participants discussed the findings and wider market developments.
The company also recently expanded its cyber team with several new appointments, including those focused on North America and actuarial capabilities, as part of its ongoing investments in modeling and threat intelligence.
