US Cyber-Insurance Premium Growth Slows as Surplus Lines Expand

The US cyber-insurance market generated $7.5 billion in premiums in 2025, up slightly from $7.1 billion the previous year, according to a new AM Best report. The modest increase was driven largely by insurers shifting cyber business from offshore entities to US-domiciled companies, indicating little underlying growth in the domestic market.

The report identifies two distinct segments within the cyber-insurance market: surplus lines insurers writing primary and excess cyber-specific policies, and admitted insurers providing cyber coverage through endorsements to commercial policies. AM Best said third-party claims have grown more rapidly in the surplus lines segment, which now accounts for nearly two-thirds of cyber-insurance premiums.

"What's important to note here is that for several years now, large companies, with mature captive insurers and sophisticated cyber risk mitigation practices, have moved away, in part or entirely, from the commercial market and insured their cyber exposure via their captives," Fred Eslami, associate director at AM Best, said. "This is not reflected in the [National Association of Insurance Commissioners] Cyber Supplement, which serves as a core source of information on this segment."

The industry's cyber-loss ratio increased 4.3 percentage points to 53.0 percent in 2025, marking the second consecutive annual increase and the first time it has exceeded 50 percent since the surge in ransomware claims during the COVID-19 pandemic.

"The gap is actually narrower than last year," Christopher Graham, senior industry analyst at AM Best, said, referring to the difference between surplus lines and admitted insurers' incurred loss ratios. "But consecutive years of a higher incurred loss ratio suggest surplus lines carriers may be writing different business than admitted carriers—particularly business prone to a longer tail for which losses take longer to settle."

The report found that while surplus lines insurers have maintained lower paid loss ratios than admitted insurers since 2021, their incurred loss ratio reached 55.9 percent in 2025, compared with 50.2 percent for admitted insurers.

AM Best also reported an increase in third-party claims, accompanied by more class action lawsuits involving fewer claimants per case, as legal firms increasingly contact individuals affected by data breaches. The report also identified small and medium-sized enterprises as an underserved market but cautioned that broad adoption among those businesses could increase aggregation risk for insurers.

Mr. Graham and Mr. Eslami will participate in an AM Best analytical briefing on July 23 alongside Ariel Evans, president of RiskQ; Roman Itskovich, founder and chief risk officer at At-Bay; and Judy Selby, partner at TittmannWeix. AM Best said it continues to maintain a stable outlook on the global cyber-insurance market, citing disciplined underwriting despite an evolving risk environment.

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