January 20, 2025 | JacobiJournal.com — Cyber Insurance: As cyber risks evolve, the insurance market is set to expand, with stable rates and ample capacity expected in 2025. A recent Gallagher report highlights increasing competition among insurance carriers, resulting in higher policy limits, enhanced risk management services, and more flexible insurance applications.
Market Growth and Projections
Gallagher’s 2025 Cyber Insurance Market Conditions Outlook reveals significant growth in the global cyber insurance market. Premiums have more than doubled over five years, reaching $14 billion in 2023, with projections of $29 billion by 2027.
John Farley, managing director of cyber at Gallagher, noted, “While we have reached a period of relative calm, the market faces storm clouds around current and emerging claims concerns.”
Emerging Cyber Threats
Cyber insurers are now focusing on new threats such as ransomware, social engineering losses, and attacks on supply chain providers. They are also preparing for losses from wrongful data collection and potential risks tied to generative artificial intelligence (AI).
In 2024, data breach costs soared to an average of $4.9 million—a 10% increase from the previous year. Investment fraud, particularly involving cryptocurrency, surged, with losses climbing from $3.31 billion in 2022 to $4.57 billion in 2023.
Cyber Insurance Adapts
The dynamic cyber threat landscape demands innovative responses from insurers. They are developing new policy language and strategies to address supply chain, regulatory, wrongful data collection, and AI-related risks. Reinsurance continues to play a crucial role, offering new capacity and support through capital markets, insurance-linked securities, and catastrophe bonds.
Despite these evolving threats, the cyber insurance market is expected to expand steadily in 2025, with the industry refining its strategies to mitigate risks effectively.
For the original report, see Gallagher’s 2025 Cyber Insurance Market Conditions Outlook.
New Update: Gallagher’s 2026 Cyber Insurance Outlook Projects Continued Market Growth and Rising AI Risks
The global cyber insurance market continues to expand as insurers respond to evolving cybersecurity threats, artificial intelligence exposures, and increasing demand for financial protection against digital attacks. In its 2026 Cyber Insurance Market Outlook, Gallagher estimated that the global cyber insurance market represented approximately $16 billion to $20 billion in gross written premiums during 2025, with projections indicating potential growth to between $30 billion and $50 billion by 2030. The updated forecast builds upon Gallagher’s earlier 2025 outlook, which anticipated continued expansion as businesses increased their reliance on digital infrastructure and sought broader protection against cyber incidents.
Although the cyber insurance market remains competitive, Gallagher emphasized that premium growth and market capacity should not be confused with a reduction in underlying cyber threats. Ransomware, third-party technology failures, data privacy disputes, and emerging artificial intelligence liabilities continue to influence how insurers evaluate coverage, determine policy limits, and assess potential financial losses.
Gallagher’s 2026 findings indicate that cyber insurance pricing has largely stabilized following the significant premium increases experienced during the earlier hard-market cycle. Increased competition among carriers and additional underwriting capacity have created opportunities for some policyholders to negotiate more favorable coverage terms, higher limits, and improved risk management services. However, these conditions vary according to industry, claims history, security controls, and the nature of an organization’s exposure.
Businesses operating in sectors with elevated cybersecurity risks may encounter more restrictive underwriting requirements or different pricing outcomes. Gallagher also identified artificial intelligence as a growing concern for cyber insurers, particularly as organizations incorporate generative AI into customer service, financial operations, software development, and business decision-making. Potential liabilities involving inaccurate AI-generated outputs, privacy violations, intellectual property disputes, and automated system failures are encouraging insurers to reassess policy language and clarify whether existing cyber insurance contracts respond to AI-related losses.
The continued development of the cyber insurance market carries important implications for businesses preparing their insurance renewals and cybersecurity strategies. While additional market capacity can improve access to coverage, organizations must carefully examine exclusions, deductibles, incident-response requirements, contingent business interruption provisions, and coverage limitations involving third-party service providers. A cyber insurance policy that responds to ransomware-related business interruption may not necessarily cover every financial loss resulting from an AI system failure or technology provider outage.
Gallagher’s 2026 analysis also highlights the importance of coordinated risk management practices, including employee security awareness, multifactor authentication, incident-response planning, vendor oversight, and regular assessments of emerging technological exposures. As cyber threats become more interconnected and insurers refine their underwriting standards, the relationship between cybersecurity preparedness and insurance coverage will remain central to managing financial risk. The latest outlook suggests that continued market expansion will depend not only on growing demand for protection but also on insurers’ ability to price increasingly complex digital liabilities while maintaining sustainable underwriting performance.
FAQs: Cyber Insurance Market Outlook 2025
What is driving growth in cyber insurance in 2025?
Cyber insurance is growing due to higher cybercrime costs, especially from ransomware, supply chain attacks, and AI-related risks. Premiums are projected to reach $29 billion by 2027.
How are insurers adapting to new cyber risk challenges?
Carriers are updating policies, boosting reinsurance, and offering stronger risk management services to address breaches, phishing, and wrongful data collection claims.
What role does reinsurance play in cyber insurance coverage?
Reinsurance provides capacity and stability for insurers, using insurance-linked securities and catastrophe bonds to manage large-scale cyber events.
Why should businesses monitor cyber insurance trends?
Following market trends helps organizations anticipate rising costs, strengthen coverage, and reduce financial exposure to digital threats.
What is the trend in cyber security 2025?
In 2025, cyber security is increasingly focused on emerging threats such as ransomware, AI-related vulnerabilities, and supply chain attacks. Companies are investing in stronger defenses, while insurers are offering policies that include risk management services to address these evolving challenges.
Is cyber security in demand in 2025?
Yes. The demand for cyber security expertise and coverage is rising due to growing cybercrime costs and sophisticated attacks. Businesses are seeking both technical protections and insurance solutions to mitigate potential financial losses from data breaches, phishing, and other digital threats.
What is the scope of cyber security in 2025?
The scope of cyber security extends beyond traditional IT protection. It now includes cloud security, AI-related risk management, regulatory compliance, and coverage for financial losses from cyber incidents. Insurers are expanding policy limits and offering tailored solutions for diverse business sectors.
What is the future of cyber insurance?
Cyber insurance is projected to grow steadily, with global premiums expected to reach $29 billion by 2027. The market will continue to adapt to new threats, offering flexible coverage, enhanced risk management services, and innovative solutions for businesses facing digital risks.
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