Global Cyber Insurance Market Holds Stable Outlook Despite Softening Rates

AM Best is maintaining a “stable” outlook for the global cyber insurance market segment, pointing to robust demand, favorable profitability over the intermediate term and expanding use of artificial intelligence in underwriting, exposure modeling and claims management.

Global cyber insurance premiums surpassed $16 billion in 2025, according to estimates from Munich Re cited by AM Best, though growth slowed compared with previous years, largely due to a decline in U.S. direct written premium amid rising competition and abundant capacity. AM Best noted a slight uptick in the loss ratio over the last three years, while the segment has remained profitable.

Softening Rates, Shifting Buyers

The cyber insurance market has become increasingly buyer-friendly, with elevated competition among carriers driving negative rate changes since 2023, AM Best said. Rates are not expected to stabilize in the near future, though a rapid increase in the frequency or severity of claims could prompt a more notable upward price correction. AM Best said heightened awareness of cyber threats has pushed insureds to strengthen their cyber hygiene, resulting in more robust defenses and swifter incident responses that have helped reduce potential losses.

Flat premium levels may also reflect a shift by some large organizations toward insuring cyber exposure through single-parent captive insurers, AM Best said, particularly among companies with strong cyber hygiene and favorable loss histories that find it more cost-effective to retain that risk internally. Because these captives generally do not file with the National Association of Insurance Commissioners, that activity is not captured in the NAIC’s cyber supplement, according to AM Best.

The U.S. remains the dominant cyber insurance market, accounting for more than half of global premiums, according to NAIC data cited by AM Best; when factoring in U.S. exposures within the Lloyd’s market, the U.S. share may approach 60% of global premiums. AM Best expects international markets, including in Europe, Latin America and Asia, to steadily gain a larger share of global premiums in the coming years.

A significant protection gap remains among small and medium-sized enterprises, where market penetration is estimated at roughly 10% to 20%, according to Swiss Re, representing a potential area of growth.

Ransomware, Systemic Risk and AI-Driven Threats

Ransomware attacks continued climbing in 2025, an estimated third consecutive record-breaking year, with the number of attacks worldwide rising more than 30% to 7,419, according to Comparitech data cited by AM Best. The U.S. remained the most targeted country, accounting for roughly half of all global ransomware attacks.

Still, AM Best said business email compromise and funds transfer fraud, not ransomware, are the leading drivers of cyber insurance losses. Major incidents such as the ransomware attacks on Marks and Spencer and Jaguar Land Rover in the United Kingdom illustrate cyber insurance’s role in mitigating wide operational disruption, according to the report.

Large-scale outages involving Amazon Web Services, CrowdStrike and CDK Global in 2024 and 2025 demonstrated the potential for a single point of failure to disrupt industries globally, AM Best said, threatening to overwhelm insurers’ capacity, particularly for business interruption claims, and exposing gaps in coverage for cascading supply chain attacks. AM Best said accurately modeling and quantifying systemic cyber risk will remain an ongoing challenge given the scale and complexity of the digital landscape and the lack of historical data on large-scale systemic events.

Artificial intelligence poses a dual-edged effect on the market, AM Best said: while it strengthens cyber defense and improves underwriting, it also enables cybercriminals to automate attacks and craft more convincing, personalized schemes at scale. Insurers themselves have increasingly become targets of cyberattacks given the volume of sensitive policyholder and exposure data they retain, according to AM Best.

Capacity and Regulatory Pressures Support Demand

Reinsurance and alternative capital continue to fuel market capacity, AM Best said, with a notable shift toward non-proportional covers for greater tail protection. The cyber-ILS market deployed more than $1.3 billion in 144A catastrophe bonds in 2025, including Beazley’s $300 million PoleStar 2026-1 and Chubb’s $150 million East Lane Re 2026-1 transactions, though AM Best expects growth in that niche to remain modest given limited historical loss data and evolving risk models.

Regulatory and compliance requirements, particularly around data protection, continue to push cyber insurance adoption, AM Best said, with frameworks tied to agencies such as the U.S. Cybersecurity and Infrastructure Security Agency shaping insurer requirements. AM Best noted that federal funding challenges, including a government shutdown that furloughed much of CISA’s workforce, have raised concerns that unaddressed vulnerabilities could be exploited by cybercriminals.

Obtain the full report here. &