Rising cyber risks are testing the market’s pricing strategy.
Cyber insurers are expected to remain profitable despite falling premiums and rising cyber threats, but analysts said the market’s outlook depends on whether insurers resist further price cuts.
“Our stable outlook on the segment reflects solid demand for coverage, even as the market pricing softens, in addition to favorable profitability over the intermediate terms and the growing use of artificial intelligence (AI),” Cristian Sieira, a senior financial analyst at A.M. Best Company, Inc. said in a July report.
The credit rating company said demand continues to grow as businesses digitise operations, comply with stricter data protection rules, and become more aware of cyber risks.
It estimated global cyber insurance premiums exceeded $16b in 2025, although growth slowed as competition and ample underwriting capacity pushed prices lower.
S&P Global Ratings said the market is approaching an “inflection point,” warning that continued rate declines could eventually erode underwriting profits if they fail to keep pace with rising claims.
“The decline in cyber insurance rates is beginning to slow, with early signs of improving pricing discipline that may help stabilise underwriting profitability and preserve the current reinsurance-led market structure,” Manuel Adam, an analyst at S&P Global Ratings, said in a July report.
“However, adverse cyber loss trends and persistent competitive pressure could challenge pricing adequacy and increase the risk of market underpricing,” he added.
Both reports identified stronger competition as the key reason premiums have declined.
AM Best said the market has favoured buyers since 2023 as insurers competed more aggressively, but underwriting remained profitable despite modestly higher claim costs.
S&P said insurers must raise premiums to keep pace with claims costs or risk underwriting losses.
AM Best said ransomware, business email compromise, and fund transfer fraud remain the main drivers of cyber insurance claims.
It added that AI is making cyberattacks more sophisticated and easier to scale. The debt watcher estimated ransomware attacks increased 30% in 2025 to 7,419 incidents worldwide.
Questions to ponder:
- Can insurers maintain pricing discipline as competition for cyber insurance intensifies?
- How should insurers price cyber risks as AI makes attacks more frequent and sophisticated?