The cyber insurance market is stabilizing as cyber underwriting practices and pricing models mature. Rate volatility is decreasing, and coverage options are expanding. A new report from Risk Placement Services (RPS) highlights key trends shaping the market in early 2025. It touches on cybersecurity, data breaches, ransomware, AI-powered cyberattacks, and AI as a defensive tool, among more.
Cyber Insurance Rates Stabilizing
After sharp increases in 2021 and 2022, cyber insurance rates began softening in 2023 and 2024. Now, the market is witnessing a leveling of rates. While pricing varies by industry and insurer exposure, broad fluctuations are less common. Some sectors, such as auto dealerships and K-12 education, are seeing specific rate adjustments due to recent large-scale cyberattacks.
Stronger Cyber Insurance Market Resilience to Cyber Events
The cyber insurance sector has shown resilience in multiple third-party vendor breaches. Despite the healthcare, automotive, and education sectors having all experienced significant cyber events, insurers have maintained stability. This indicates that underwriting processes are succeeding in the handling of large-scale cyber disruptions.
Evolving Underwriting Trends
“Inside-Out” Underwriting on the Rise
Underwriters are increasingly requesting direct access to policyholders’ security systems. This allows for a more precise risk assessment by verifying security measures such as multifactor authentication (MFA) and endpoint detection and response (EDR) tools. However, many businesses remain hesitant to provide such transparency.
Emphasis on 24/7 Security Operations
Middle-market and large businesses are now expected to implement 24/7 cybersecurity monitoring. Insurers are pushing for security operations centers (SOCs) that can detect and respond to threats in real-time. Businesses relying on outdated security practices, such as ad-hoc email alerts, may struggle to secure coverage.
Relaxed Security Requirements for SMEs
Some insurers are loosening cybersecurity control requirements for smaller businesses. Companies with less than $25 million in revenue may find it easier to obtain coverage, even if they lack cybersecurity measures like MFA.
Increased Scrutiny of Third-Party Vendors
Recent cyber incidents linked to third-party vendors have led insurers to ask more questions about policyholders’ service providers. Businesses using software-as-a-service (SaaS) platforms and data hosting providers may need to provide additional details about vendor security practices.
Expanded Coverage and Higher Limits
Growing Availability of $5M and $10M Limits
Market capacity is increasing, making it easier for businesses to secure higher insurance limits. Although some industries, such as healthcare and education, still face challenges, overall access to large coverage amounts has improved.
Broader Business Interruption Coverage
The cyber insurance market is expanding to cover more types of business interruptions. Traditional policies focused on IT service providers, but insurers now recognize the importance of covering non-IT vendors. This change was driven by incidents like the 2024 ransomware cyberattack on a medical billing company, which disrupted business operations for numerous clients.
Cyber Insurance Carrier Dynamics
New Entrants and Mergers Reshaping the Market
The cyber insurance sector is seeing an influx of new managed general agents (MGAs) and insurtech partnerships. This is creating a mix of innovation and stability. Some insurers are shifting away from traditional insurance models. Others are integrating cybersecurity services directly into their offerings.
Insurers Offering Built-In Security Solutions
More insurers are bundling cybersecurity tools. These include EDR and MDR solutions, as part of the policies. Some include these services at no extra cost, while others charge additional fees. This trend reflects a broader push to enhance security and, as a result, open new revenue streams.
Cyber Claims Trends in 2025
Rising Frequency of Cyber Claims
At the start of 2025, there was a surge in cyber insurance claims. This is mainly due to third-party vendor incidents. One common target, SaaS platforms catering to specific industries. Many claims involve ransomware attacks, data breaches, or network access restrictions.
Business Interruption and Litigation Costs Soaring
RPS data shows a 72% increase in business interruption losses compared to 2023. Litigation settlements have also risen by over 74%. Cyber insurance policies are increasingly covering these losses, but claims processing times are increasing due to the complexity of these cases.
Ransomware Payments Remain High
While ransomware attacks continue, fewer victims are paying ransom demands. However, for businesses with annual revenues under $100 million, average ransom payments still exceed $300,000.
Top Cyber Insurance Claims in 2025
- Breach counsel costs
- Forensic investigations
- Payment fraud losses
- Extortion payments
- Defense counsel expenses
The rising costs of cyber incidents highlight the importance of robust security measures and proactive risk management.
Future Outlook for Cyber Insurance Market
Stronger Focus on Application Accuracy
Cyber insurance applications are becoming more technical. Insurers expect businesses to involve IT, legal, and risk management teams when completing applications. Inaccurate or misleading information could lead to denied claims or policy cancellations.
Enforcement of Pre-Approved Vendor Use
Insurers are tightening control over cyber incident response. Businesses may be required to use insurer-approved cybersecurity vendors for forensic investigations and legal support. Failing to do so could limit coverage.
Increasing Sector-Specific Cyber Threats
Large-scale cyberattacks targeting specific industries are expected to continue. Financial services, manufacturing, and hospitality sectors may face increased scrutiny from insurers as they rely more heavily on due to their reliance on dominant technology providers.
AI’s Expanding Role in Cybersecurity
As many other reports have noted, AI-powered cyberattacks are growing in sophistication. Wisely, insurers and cybersecurity firms are leveraging AI. It is being utilized for risk assessment, threat detection, and claims processing. This balance, between AI-driven threats and AI-powered defense strategies, appears likely to shape the industry’s future.
Conclusion
Rate stability, improved underwriting, and expanded coverage options signal a more predictable cyber insurance market landscape for businesses seeking protection. However, companies must remain vigilant due to the evolving threat environment driven by AI and supply chain vulnerabilities.
Other News: Global Cyber Insurance Market to Grow to $68.17 Billion by 2030(Opens in a new browser tab)
