The cyber insurance market continues to mature in 2025, with Risk Placement Services (RPS) reporting increasing stability in coverage terms, underwriting processes, and pricing trends.
According to RPS, coverage terms have remained relatively stable, with insurers focusing on refining policy language rather than expanding coverage broadly. While early developments in cyber insurance sought to widen protections, recent adjustments have narrowed coverage in areas such as biometric information privacy, website tracking software, and business interruption related to supply chain providers.
However, RPS notes that insurers are now beginning to introduce specific policy enhancements for artificial intelligence (AI) and machine learning risks, particularly within privacy, security liability, social engineering, and cyber deception coverage.
RPS reports that underwriting practices have also reached a more consistent standard. Over the past several years, cyber insurers developed more technical applications that focus on risk controls such as remote access security, data segmentation, email protections, and real-time monitoring software
While application requirements had been evolving rapidly, RPS indicates that the industry has reached a level of stability, with fewer changes in underwriting requirements. However, future unforeseen cyber events could still prompt adjustments to application processes.
Meanwhile, cyber insurance is also emerging as a critical safeguard for businesses, particularly those with limited cybersecurity resources.
A report from Coalition found more than 5 million internet-exposed remote management solutions, a vulnerability that cybercriminals frequently exploit. With more than 45,000 software vulnerabilities projected to be published in 2025, businesses face mounting security challenges.
Pricing trends in cyber insurance have also shifted. RPS states that the rate increases imposed in 2021 and 2022 following the ransomware surge improved profitability for many insurers.
While 2023 and 2024 saw some rate softening, RPS reports that pricing changes have now leveled off, with significant movement in rates primarily tied to insurer profitability within specific industry sectors.
The cyber insurance market has also shown resilience in response to large-scale cyber incidents involving third-party vendors, according to RPS. Recent events affecting 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.
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 rather than relying solely on traditional application forms.
Another underwriting trend identified by RPS is the increased focus 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. RPS notes that answers such as "ad-hoc" or "email alerts" on cyber insurance applications are no longer sufficient for businesses outside 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.
It also remains to be seen how insurers will implement "vendor fencing," a practice that could limit coverage if an insurer determines it has excessive exposure to policyholders reliant on a single vendor.
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. While 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, allowing for more precise risk evaluation.
Coverage expansion continues to be a focus in response to supply chain and third-party vendor risks, RPS says. Business interruption coverage has broadened to account for both IT and non-IT service providers, ensuring that disruptions caused by vendors outside of traditional technology services are covered.
This shift follows incidents such as a ransomware attack on a medical billing company, which demonstrated 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.
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