The cost of protecting against catastrophic cyber events has seen a dramatic reduction at the start of 2026, as an oversupply of reinsurance capacity drives down prices for global insurers, new analysis shows.

According to the latest Gallagher Re Global Cyber Aggregate Excess of Loss Risk Adjusted Rating (RAR) Index, reinsurance buyers secured an average risk-adjusted rate drop of 32 per cent during the January 1 renewals.

This sharp decline follows a period of market softening that began in 2024, marking a significant departure from the “hard market” peaks of 2023.

The 2026 update reveals a landscape where supply significantly outweighs demand. This overcapacity has allowed primary insurers to secure not only lower prices but also vastly improved structural terms, such as lower attachment points.

Ian Newman, global head of cyber at Gallagher Re, noted that buyers of non-proportional cyber protection are increasingly turning to aggregate structures to hedge against “asymmetric” threats, including systemic outages and adverse loss trends like the ransomware surges seen in previous years.

Gallagher Re said the continued downward pressure on rates is attributed to several evolving market dynamics, including an influx of capacity, trends in ransomware and forecasts of growth.

Substantial liquidity has been injected into the sector from traditional reinsurers and alternative capital markets, including cyber catastrophe bonds.

There is also a positive ransomware trend. While threats persist, the percentage of victims paying ransoms fell to under 32 per cent in 2025, and average paid ransoms dropped 10 per cent to between $1.2 million and $1.8 million.

And despite the current softening, the global cyber insurance market remains on a steep growth trajectory. Experts forecast it could scale from roughly $19.6 billion in 2026 to between $30 billion and $50 billion by 2030.

While pricing has retreated from its all-time highs, the report of the updated Global Cyber Aggregate Excess of Loss Risk Adjusted Rating Index warns that the market is entering an “inflection point” regarding systemic risk. Emerging threats from AI-driven attacks and supply chain vulnerabilities — where one compromise can impact thousands of victims — remain top priorities for underwriters.

Also mentioned was that the healthcare sector continues to be a notable exception to the softening trend, with some carriers implementing single-digit rate increases due to sustained claims activity.