Cyber Insurance Demand Is Surging-Here's What's Driving It
Cyber risk is accelerating as cloud adoption grows, systems connect across vendors, geopolitical tensions spill online, and new compliance rules tighten. That mix is pushing cyber insurance to the front of the portfolio for buyers and brokers.
In a recent GlobalData survey, 27% of industry insiders said cyber will see the strongest demand growth, ahead of political risk (25%), supply chain (23.8%), and business interruption (13.1%). Another report projects the market to rise from $20.56 billion this year to $44.67 billion by 2032, an average of 11.65% growth per year.
Fast-Evolving Threats, Real Costs
Threat groups are adopting AI faster, scaling attacks in both volume and sophistication. The downside risk is clear for enterprises and SMBs alike.
IBM's latest data breach study put the average incident at $4.4 million-enough to disrupt growth plans or sink an underprepared small business. Read the IBM report.
Geopolitics Pushing Risk Online
Conflicts in Eastern Europe and the Middle East are feeding more organized operations against corporate networks and critical infrastructure. As one analyst noted, many incidents now tie back to geopolitical escalation and nation-state activity rather than isolated criminal groups.
Buyers want clearer coverage and more active support: real-time threat monitoring, stronger claim readiness, and faster recovery after an incident. Carriers that provide pre-breach value are winning attention before renewal season even starts.
Market Economics: Costs, Tariffs, and Premium Pressure
Technology costs influenced by tariff policies have raised procurement expenses for security tools and services. Those increases ripple into premium calculations and carrier cost structures.
Vendors are still adjusting supply chains and sourcing to keep services stable. Underwriting and pricing need to account for these shifts and their knock-on effects in claims and aggregation.
SMB Exposure and the Complacency Gap
Less than 20% of SMBs have the protection they need. Many still believe they're too small to matter or that basic antivirus is enough-meanwhile, automated attacks don't discriminate.
A common pattern: business email compromise and ACH fraud through vendors. In construction, for example, threat actors spoof invoices through an architecture or concrete partner and siphon $20,000-$50,000 in a single hit.
What This Means for Carriers, MGAs, and Brokers
- Clarify nation-state and systemic risk language: Be explicit on war/terror exclusions, attribution thresholds, and cyber war endorsements. Map and reduce silent cyber exposure.
- Strengthen BI and contingent BI wording: Model vendor and SaaS provider outages. Set clear triggers, waiting periods, and sublimits that reflect today's vendor-heavy tech stacks.
- Price by control maturity: Tie credits/surcharges to evidence of MFA, EDR/XDR, immutable backups, SSO, privileged access controls, patch SLAs, phishing training, and tested IR plans.
- Move to prevention-and-response bundles: Include attack surface scans, vendor risk scoring, phishing simulations, and 24/7 incident response with defined SLAs. Make the value visible before a claim.
- Speed claims operations: Standardize intake data, pre-approve panels, and track KPIs like time-to-first-contact under two hours and faster indemnity cycles.
- Address supply chain risk head-on: Require vendor inventories and critical-provider attestations. Offer endorsements for named vendors and SaaS downtime.
- Manage aggregation: Use scenario stress tests, cap systemic exposure, and communicate appetite clearly to brokers.
- Simplify SMB distribution: Provide short-form apps, pre-bind scans, and broker playbooks that close the education gap.
- Leverage MSP/MSSP telemetry: Build data partnerships for continuous control validation and explore usage-based pricing pilots.
- Support compliance needs: Align services and documentation with emerging disclosure and privacy requirements to cut friction for insureds.
The MSP/MSSP Shift Changes Underwriting
Managed service providers are turning cybersecurity into the core of their offering, not an add-on. That means more standardized control stacks, more insurance questionnaires, and more data to validate risk posture.
Insurers that integrate with MSP workflows can verify controls faster, reduce surprise gaps, and respond to breaches with less friction-benefiting both loss ratios and client outcomes.
What to Watch Through 2026
- Persistent demand as ransomware, third-party outages, and business email compromise continue.
- Pricing differentiation based on control maturity and verified telemetry, not check-the-box questionnaires.
- Clearer wordings around cyber war, systemic events, and contingent BI triggers.
- More embedded offerings via MSPs, ERP, and SaaS ecosystems.
- Broader use of real-time risk signals in underwriting and claims.
Quick Checklist for Stronger Submissions
- Proof of MFA, EDR/XDR, immutable backups with recent restore tests, and last tabletop date.
- Top 10 critical vendors, contract language for security/notification, and contingency plans.
- Email security stack (DMARC, DKIM, SPF) and payment verification steps for BEC/ACH protection.
- Incident response plan, data retention posture, and breach notification workflows.
- Executive ownership: named security lead, budget trend, and board reporting cadence.
Bottom Line
Cyber is moving from optional to essential. Buyers want clarity, measurable value before a claim, and faster recovery after one-while carriers need better signal, stronger wordings, and tighter operations.
The opportunity is clear: be the partner that reduces risk on day one, not just the payer on day 90.
Resources
- IBM: Cost of a Data Breach Report
- Upskilling teams on AI risk and workflows: Complete AI Training - Courses by Job
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