Cyber Insurance Market Evolves with Focus on Continuous Monitoring
The cyber insurance market continues to mature, according to Risk Placement Services (RPS), which is reporting greater stability in coverage terms, underwriting processes, and pricing trends.
RPS indicates that the market has shifted towards refining policy language rather than broadly expanding coverage. While early cyber insurance developments aimed to widen protections, recent adjustments have narrowed coverage in specific areas.
However, RPS notes that insurers are now introducing specific policy enhancements for artificial intelligence (AI) and machine learning risks within various aspects of cyber coverage.
Underwriting Practices Become More Consistent
Underwriting practices have also stabilized. In recent years, cyber insurers developed more technical applications focused on risk controls, such as remote access security, data segmentation, email protections, and real-time monitoring software. RPS indicates that the industry has reached a level of stability, with fewer changes in underwriting requirements.
Cyber Insurance as a Critical Safeguard
Cyber insurance is also emerging as a critical safeguard for businesses, particularly those with limited cybersecurity resources. According to a report from Coalition, more than 5 million internet-exposed remote management solutions exist—a common target for cybercriminals. With a projected 45,000 software vulnerabilities expected to be published in 2025, businesses face considerable security challenges.
Shifting Pricing Trends
Cyber pricing has shifted, as well. RPS states that rate increases imposed in 2021 and 2022 improved profitability for many insurers following the ransomware surge. While 2023 and 2024 saw some rate softening, pricing changes have now leveled off. Significant rate movement is primarily connected to insurer profitability within specific industry sectors.
According to RPS, the cyber insurance market has demonstrated resilience in response to large-scale cyber incidents involving third-party vendors. Recent events in the healthcare, automotive, and education sectors had broad implications across multiple policyholders, but the market withstood the impact, reflecting stronger underwriting processes and more refined pricing models.
New Underwriting Methods
Cyber underwriters are also shifting toward new assessment methods, RPS reports. A growing number of insurers are adopting “inside-out” underwriting, which involves direct access to an organization’s security infrastructure instead of relying solely on traditional application forms.
Another notable trend is the increased emphasis on 24/7 security operations for middle-market and large risks. Insurers now expect continuous network monitoring and proactive threat mitigation, rather than passive alert systems. According to RPS, answers such as “ad-hoc” or “email alerts” on cyber insurance applications are no longer sufficient for businesses outside of the small- to mid-sized enterprise (SME) sector.
RPS also highlights an increased focus on third-party vendor risk in underwriting. Given the number of high-profile cyber incidents involving software-as-a-service (SaaS) providers, information security vendors, and data hosting services in 2024, insurers are asking more detailed questions about vendor relationships. The implementation of “vendor fencing,” a practice that could limit coverage if an insurer determines it has excessive exposure to policyholders reliant on a single vendor, remains to be seen.
Cyber Capacity Expansion
Capacity in the cyber insurance market has also expanded, making it easier to secure $5 million and $10 million limits for primary and excess coverage, RPS reports. Although certain industries, such as public entities, education, and healthcare, still face capacity challenges, the ability to source higher limits has improved. RPS attributes this to the integration of data analytics tools in the pre-underwriting process, leading to more precise risk evaluation.
Coverage expansion continues to be a priority in response to supply chain and third-party vendor risks, RPS says. Business interruption coverage has broadened to encompass both IT and non-IT service providers, ensuring that disruptions caused by vendors outside of traditional technology services are covered. This shift followed incidents such as a ransomware attack on a medical billing company, demonstrating the need for broader definitions of dependent business interruption coverage.
Looking ahead, RPS anticipates ongoing discussions between insurers and policyholders regarding coverage expansion and risk mitigation strategies. As industry leaders assess market share concentration risks, every sector could face exposure to the next large-scale cyber event.
