Gallagher Re’s Cyber Risk Adjusted Rating Index has doubled since 2020.

Reinsurance broker Gallagher Re recently introduced its Cyber Risk Adjusted Rating (RAR) Index, showing a 100% increase in value from January 1, 2020, to January 1, 2025. This reflects rising rates-on-line as the cyber market expands amid a shifting risk landscape.

The Cyber RAR Index tracks changes in reinsurance pricing while accounting for fluctuations in underlying risk levels. Notably, the index surged by 62% from 2020 to 2021, followed by a 63% rise between 2021 and 2022, indicating higher cyber reinsurance costs. However, growth slowed to 16% from 2022 to 2023 before reversing. From 2023 to 2024, the index fell by 16%, and the decline continued into 2024–2025 with a further 22% drop. While the index remained 100% higher than its 2020 value as of January 1, 2025, it was still 34% below its peak in January 2023.

Ian Newman, Global Head of Cyber at Gallagher Re, noted that despite recent strong performance, the cyber market continues to grow and face evolving risks. As cyber is both a catastrophe-exposed and systemic risk class, reinsurance buyers seek well-priced non-proportional protection. He emphasized that over time, the Cyber Aggregate Excess of Loss market index will serve as a key indicator of cyber reinsurance pricing trends.

Gallagher Re highlighted that Aggregate Stop-Loss and Aggregate Excess of Loss structures have remained the preferred reinsurance solutions since 2015 due to their effectiveness in covering systemic cyber risks, loss frequency patterns, and challenges like the surge in ransomware between 2018 and 2021. Additionally, the catastrophe bond market has begun incorporating structured cyber risks in excess-of-loss cat bond formats. Although still a small portion of the overall cat bond market, this sector is expected to grow.