Cyber insurance is becoming easier to buy in some markets, but it is not making cyber risk disappear. Prices and terms have softened from the post-ransomware hard market, while claims, business-interruption losses and scrutiny of security controls remain substantial. The practical effect is a closer link between insurance buying and security operations: organizations must be able to demonstrate that controls described in an application are implemented, maintained and tested.
What is changing in the cyber-insurance market?
Market conditions are less uniformly restrictive than they were after the COVID-era ransomware surge. Competition has increased, some buyers can obtain broader coverage or higher limits, and average rates have begun to fall. The change is uneven by sector, geography, insurer appetite, limits, loss history and policy wording.
| Measure | Reported result | How to interpret it |
|---|---|---|
| Global cyber-insurance premiums | Nearly $15 billion in 2024, up 7% from 2023 (NAIC, 2025) | Growth was concentrated mostly outside the United States. |
| U.S. direct written premium, including alien surplus lines | About $9.14 billion in 2024 (NAIC, 2025) | Down about 7% from 2023; this is a different measure from U.S.-domiciled premium. |
| U.S.-domiciled insurer premium | $7.08 billion in 2024, compared with $7.25 billion in 2023 (NAIC, 2025) | Shows the scope of the U.S.-domiciled segment only. |
| U.S. reported claims | Nearly 50,000 in 2024, almost 40% more than the prior year (NAIC, 2025) | Lower premiums do not demonstrate lower incident frequency or loss severity. |
| Average U.S. cyber rate | Down 5% in Q4 2024, the first quarterly decline after seven years of increases (NAIC, 2025) | An aggregate market result, not a guaranteed discount for a particular control or company. |
Aon’s broker-market report for Q4 2025, published February 2, 2026, described a soft market with price decreases, broader coverage and increased limits. Almost one-fifth of its clients bought additional cyber limits during 2025. Aon also reported continuing ransomware and cyber business-interruption losses, deterioration in some older privacy-liability claims and tougher conditions for healthcare, airlines and financial institutions. Those observations describe Aon’s portfolio and market view, not a nationwide regulatory census or an individual quote.
Why security controls now affect insurance more directly
After ransomware losses accelerated, insurers raised rates, increased deductibles and added sublimits. Some policies also contain a “failure to maintain security” or “failure to follow” exclusion. Where such wording applies, a claim connected to failure to maintain stated minimum or adequate safeguards may be excluded. The exclusion is not universal; its effect depends on the actual policy language, application answers and facts of the incident.
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Applications are operational assertions
Questions about multifactor authentication, backups, endpoint protection, privileged access, vulnerability management, incident response and vendor oversight are not merely administrative. An inaccurate or outdated answer can create a dispute when a loss occurs. Security, IT and risk teams should agree on who owns each answer and retain evidence such as configuration exports, access reviews, backup-restore tests, patch reports and exercise records.
A control can be valuable without producing a guaranteed discount
The NAIC reported that underwriters viewed companies’ investments in cybersecurity controls favorably. That does not establish a universal credit for any product or safeguard. Pricing still reflects the whole risk profile, including sector, revenue, limits, claims, dependencies and insurer capacity.
Which security priorities matter most?
Insurance should reinforce a security program rather than define it. CISA’s voluntary Cross-Sector Cybersecurity Performance Goals provide a useful structure across governance, identification, protection, detection, response and recovery. They are a planning baseline, not an insurance rulebook.
Use phishing-resistant multifactor authentication where feasible
CISA ranks hardware-based phishing-resistant MFA, including FIDO/WebAuthn and PKI, as its strongest listed MFA option. A FIDO2 security key is one practical implementation. App-based tokens are a fallback when hardware methods are unavailable; SMS or voice should be reserved for situations in which stronger options cannot be used. Check identity-provider, application and account compatibility before deployment. No evidence establishes that every insurer requires security keys or guarantees a premium reduction for buying them.
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Make recovery measurable
- Define recovery-time and recovery-point objectives for critical services.
- Keep protected, tested backups and record restoration results.
- Maintain an incident-response plan with decision authority, communications and insurer-notification steps.
- Exercise ransomware, cloud-outage and third-party failure scenarios.
Include suppliers and interconnected services
The NAIC’s 2025 report highlights third-party-driven incidents and non-malicious outages, including the July 2024 CrowdStrike event, alongside ransomware, business interruption, class-action litigation and regulatory investigations. Security planning therefore needs dependency mapping, vendor access controls, contractual notification requirements and fallback procedures—not only malware defenses.
How should buyers compare policies?
Do not compare premiums alone. Request the same information from each insurer or broker and review the wording with someone who understands both cyber operations and insurance contracts.
- Covered events: Confirm how the policy treats ransomware, business interruption, dependent business interruption, data restoration, privacy claims, regulatory investigations and technology-service outages.
- Limits and sublimits: Check the aggregate limit, per-incident limit and lower sublimits for categories such as extortion, funds transfer, notification or restoration.
- Retention and deductibles: Establish whether amounts differ by event type, subsidiary, geography or waiting period.
- Exclusions: Read failure-to-maintain-security, war, infrastructure, unencrypted-data and contractual-liability wording, including how exclusions interact with application representations.
- Response services: Identify approved breach counsel, forensic firms, negotiators, notification providers and the process for using an alternative provider.
- Insurer requirements: Record required controls, deadlines, reporting duties and changes that require notice during the policy term.
- Layering: Distinguish primary coverage from excess layers; an excess policy may follow different conditions or attach only after underlying limits are exhausted.
What this means for security spending
Budgeting should focus on risk reduction and demonstrable readiness, not on a promised return in the form of a lower premium. Prioritize controls that reduce both incident likelihood and recovery cost: strong identity protection, tested backups, vulnerability remediation, logging and detection, privileged-access management, segmentation, response retainers and supplier-risk management.
Before renewal, perform a joint review involving security, infrastructure, legal, finance and the insurance owner. Map every application answer to an evidence source, test recovery assumptions, quantify critical dependencies and identify controls that changed since the last submission. If a control cannot be maintained consistently, disclose the gap and discuss appropriate wording rather than treating the application as a target state.
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What earlier market history explains
The U.S. Government Accountability Office reported that cyber-insurance take-up among one global broker’s clients rose from 26% in 2016 to 47% in 2020. Its 2021 report also described rising premiums, lower limits in some high-risk sectors and difficulty pricing risk because historical loss data was limited and policy definitions were inconsistent. Those figures establish the market’s structural challenges at that time; they are not current pricing data.
The security decision in one sentence
A softer insurance market can improve a well-prepared organization’s negotiating position, but claims and losses remain material. Treat the policy as one layer of financial risk transfer, keep security claims accurate and evidenced, and build prevention, response, recovery and third-party resilience independently of whether a carrier offers a lower rate.
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