Dive Brief:
The size of the cybersecurity insurance market is growing quickly as more businesses try to guard against the damage from a major hacking incident.
“Total U.S. domestic cyber direct written business has nearly tripled since 2020, making cyber insurance one of the fastest-expanding segments in insurance,” the National Association of Insurance Commissioners said in a statement Wednesday about its new report on the topic.
Chubb, Beazley and St. Paul Travelers are the top three insurers by the value of their direct written premiums, according to the report.
Dive Insight:
Insurance payout data illustrates how much costlier cyberattacks are becoming, as AI empowers even low-skilled hackers to carry out sophisticated and wide-ranging attacks.
For businesses with at least $1 billion in annual revenue, the average size of a claim in 2025 was $4.4 million — double the figure from 2024 and up 586% since 2021. NAIC attributed the skyrocketing growth to “rising business interruption expenses and the growing cost of data breach and privacy-related litigation.”
The average claim size also rose for businesses in the mid-market, but more modestly. In 2025, it was $759,000, a 23% increase from the 2024 figure of $619,000. Smaller firms saw a decline in their average claim size between 2024 ($215,000) and 2025 ($142,000).
In 2025, insurers saw 10 cybersecurity insurance payout claims per 100 policies among large businesses, down from 15 in 2024.
“This combination of lower frequency but sharply higher severity at the top of the market might suggest that improved underwriting selection and security controls may be reducing the number of incidents reaching a claim,” NAIC said in its report, “even as the incidents that do occur, particularly at large organizations, are becoming noticeably more expensive to resolve.”
Frontier AI models, the maturing cybercrime ecosystem, persistent supply-chain risks and increasing nation-state activity are all fueling a more dangerous cybersecurity environment, according to the NAIC report.
“Cyber risk is evolving at the pace of machines,” the association warned, “but remediation continues to lag because organizational processes are based on human speed.”
AI is likely to significantly shape the cybersecurity insurance market, NAIC said. “If AI democratizes offensive capability faster than defenders can patch, loss ratios may deteriorate, particularly for insureds relying on common software stacks.”
But while AI is a major problem, the NAIC report called supply-chain risk “the defining challenge of the current cycle,” given how hard it is for businesses to map and oversee their technological dependencies. “A single event or vulnerability can trigger correlated losses across many policyholders simultaneously,” the report said.
NAIC’s report also highlighted innovations in the cybersecurity insurance market that show how insurers are responding to changes in the threat environment. In August, AIG expanded its coverage options to include a mechanism for helping businesses quickly cope with cloud service outages. “The scale of the underlying exposure is significant,” NAIC said, given how reliance on cloud platforms has increased.
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