Cyber insurance premiums have dropped from their peak levels seen between 2020 and 2022, but the pressure from rising claims continues. Experts warn that the recent softening in the market might not last long and could soon shift back.
Mickey Estey, executive vice president at RT Specialty, said while claims like data breaches and ransomware continue, the surge that drove prices up a few years ago is unlikely to return. He noted that prices have been coming down over the last couple of years, giving buyers some relief. Still, Estey expects that pricing might level off and even start to rise again in the near future.
After a tough period marked by underpriced policies and waves of claims, the cyber insurance market is stabilizing. Estey explained that during the hard market, underwriters often failed to ask the right questions to correctly assess risk. Now, insurers have improved their underwriting and better understand the risks they cover, making them more confident in their decisions.
With falling premiums, more businesses are returning to higher coverage levels or joining the market for the first time. Some insureds who had previously reduced coverage are now increasing their limits again. Estey pointed out that companies who had limits of $10 million are boosting them to $20 million, and those with $20 million coverage are moving up to $40 million.
The market is also seeing new entrants, with four or five companies joining recently. While these new players haven’t pushed prices down drastically, their presence shows that the cyber insurance market is healthy and growing.
Despite improvements, many buyers still don’t fully understand what their cyber insurance covers. Estey mentioned that some insureds assume policies only cover data breaches or ransomware, but there are actually many more protections included. This gap in knowledge is an opportunity for brokers to educate clients and tailor offerings based on company size. Small businesses might need different risk services than larger ones, which mainly seek more coverage capacity.
Looking ahead, Estey believes the U.S. market has matured, with most companies having been offered cyber insurance. However, growth potential lies overseas in places like the UK, Europe, and Asia, where fewer companies currently buy cyber coverage.
On a related note, artificial intelligence (AI) risks are already largely covered under existing cyber policies. While AI technologies bring new concerns, such as data misuse or copyright issues, insurers are watching closely to see if unexpected risks emerge that might require policy updates.
One ongoing challenge is helping businesses figure out how much insurance they truly need. Exposure varies widely—not every large company faces the same risks, and some small companies can have significant vulnerabilities. Insurers and brokers continue to work on ways to assist clients in making smarter buying decisions.
All in all, the cyber insurance landscape is settling into a steadier phase. Prices are down from their peak, coverage limits are increasing, and the market looks set to grow globally. But claims are still driving pressure, and everyone is keeping an eye on how things will develop next.