Key Takeaways

  • Cyber insurance remained profitable as global premiums exceeded $16 billion in 2025, but competitive pricing is putting margins under pressure.
  • A.M. Best Company, Inc. and S&P Global Ratings see ransomware, AI-enabled attacks, and rising claims costs as growing tests of underwriting discipline.
  • Buyers may continue to benefit from softer rates, although insurers are likely to scrutinise security controls and coverage terms more closely.

Cyber insurers are balancing expanding demand and favourable underwriting results with falling rates and increasingly complex claims. While additional capacity has given buyers more choice, ransomware and fraud losses have become harder to predict.

In a July report, A.M. Best Company, Inc. maintained a stable outlook for the segment.

“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),” a senior financial analyst at A.M. Best Company, Inc. said.

Global cyber insurance premiums exceeded $16 billion in 2025, according to AM Best. That followed a market of nearly $15 billion in 2024, when worldwide premiums increased 7% year over year. The direction remains positive globally, although the pace has slowed considerably from the hard market of 2020 through 2022.

Total premium volume can rise as more organisations purchase protection, even when the price charged for each unit of risk declines. In the United States, direct written premium was about $9.14 billion and fell for the first time in 2024. Meanwhile, the NAIC reported global cyber insurance rates dropped 22% from their mid-2022 peak.

Despite lower prices, underwriting remains profitable. The US standalone cyber market recorded a 47% direct loss and defence-cost-containment ratio in 2024. Across 2022 through 2024, the product’s average loss ratio remained within the 40% to 50% range, reaching about 49% in 2024. Those figures leave room for underwriting profit, though expenses and reinsurance costs also affect the final result.

The concern is what happens if rates keep declining while claims become more frequent or expensive. S&P Global Ratings described the market as approaching an “inflection point,” where pricing discipline could determine whether current profitability persists.

“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,” an analyst at S&P Global Ratings said in a July report.

The analyst also warned that adverse loss trends and continued competition could weaken pricing adequacy. Insurers face a narrow balancing act: raise prices too sharply and competitors may take the business, but keep cutting them and premiums may no longer reflect the underlying exposure.

AM Best identified ransomware, business email compromise, and fund transfer fraud as the leading sources of cyber claims. Artificial intelligence can amplify that pressure by helping criminals produce more convincing phishing messages, automate reconnaissance, and scale campaigns across a larger pool of targets.

While attractive pricing may remain available for corporate insurance buyers, applications and renewals could become more demanding. Insurers can be expected to pay closer attention to identity controls, multifactor authentication, backup practices, endpoint monitoring, incident-response planning, and the security of critical vendors. Coverage wording, sublimits, exclusions, and retention levels may matter as much as the headline premium.

Cyber insurance remains a relatively small product compared with the wider property and casualty market. Its limited scale gives insurers room to grow, but it also makes dependable modelling and reinsurance capacity important. The next stage will likely test whether AM Best’s stable outlook can coexist with the pricing discipline S&P Global Ratings says the market now needs.