AM Best Maintains Stable Outlook for Global Cyber Insurance Market

AM Best has maintained a stable outlook for the global cyber insurance market in its report, Market Segment Outlook: Global Cyber Insurance. The report cites continued demand for cyber insurance, favorable profitability expectations, and growing adoption of artificial intelligence (AI) as key factors supporting the sector, even as market pricing continues to soften.  

According to the report, demand for cyber insurance is expected to remain strong due to ongoing digitalization, expanding regulatory requirements, and increased awareness of cyber risk across industries. AM Best said profitability should remain favorable over the intermediate term, although underwriting margins could narrow as competition increases. The report also highlights continued investment in cybersecurity prevention, resilience, and incident response, along with the use of AI and advanced analytics to improve underwriting, exposure modeling, and claims management.  

Per AM Best, several challenges continue to weigh on the sector. Persistent cyber threats—including ransomware, business email compromise, and funds transfer fraud—remain significant sources of potential losses. The report also identifies systemic cyber risk, increasingly sophisticated AI-enabled attacks, insurers' own exposure to cyber incidents, and geopolitical uncertainty as ongoing concerns that could affect the market.  

According to the report, regulatory developments continue to support cyber insurance adoption, particularly in highly regulated industries such as healthcare and financial services. Organizations increasingly view cyber insurance as part of broader risk management and regulatory compliance strategies to help manage the financial consequences of data breaches and regulatory actions. The report also notes that evolving cybersecurity standards and data protection requirements are expected to further support demand in many markets.  

AM Best said the cyber insurance market remains favorable for buyers, with premium rates continuing to decline amid abundant capacity and increased competition. While pricing is not expected to stabilize in the near term, the report notes that a significant increase in the frequency or severity of claims could result in future price corrections. Despite softer pricing, loss ratios have increased only slightly over the past three years while the market has remained profitable.  

Per the report, global cyber insurance premiums exceeded an estimated $16 billion in 2025, although growth slowed compared with previous years. AM Best attributes part of this trend to increased competition in the US market and notes that some large organizations are choosing to insure cyber risks through their own single-parent captive insurance companies, allowing them to retain underwriting benefits associated with favorable loss experience.  

According to AM Best, significant opportunities for future growth remain among small and medium-sized enterprises (SMEs), where cyber insurance penetration is still relatively low. The report also expects international markets to account for a larger share of global premiums over time as awareness, regulatory developments, and digitalization continue to drive adoption in Europe, Latin America, and Asia.  

The report also highlights the important role of reinsurers and insurance-linked securities (ILS) in supporting market capacity. Per AM Best, additional reinsurance capacity has enabled insurers to offer broader coverage and higher policy limits, while cyber catastrophe bonds continue to develop as an alternative source of capital despite representing only a small portion of the broader ILS market.  

AM Best said ransomware activity continues to increase globally, although business email compromise and funds transfer fraud remain the leading drivers of cyber insurance losses. The report also points to systemic cyber events, AI-powered cyberattacks, and insurers' own cybersecurity exposures as risks that require continued investment in cybersecurity practices, underwriting discipline, and risk management.

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