The global cyber insurance market is facing a dramatic correction as premium rates surged 22% in Q2 2025, according to the latest industry data. The hike, driven by an increase in ransomware frequency, larger claim payouts, and evolving threat vectors, is prompting businesses to reassess both their cyber hygiene and insurance strategies.
Premiums Spike as Ransomware and AI Threats Rise
Data from Marsh McLennan’s Q2 2025 Global Cyber Risk Report shows that ransomware attacks have become not only more frequent, but increasingly devastating. The average ransom payment rose to $1.3 million, and attack durations and data exfiltration tactics are more sophisticated than in previous years.
“Insurers are under pressure due to back-to-back quarters of elevated claims. We’re not just seeing isolated incidents—this is systemic,” said Julia Romero, lead underwriter for cyber risk at Allianz Global Corporate & Specialty (AGCS). “With AI-driven malware, deepfake-based phishing, and critical infrastructure targeting on the rise, carriers are responding by adjusting their exposure and expectations.”
Stricter Requirements to Qualify for Coverage
Along with price hikes, cyber insurers are raising the bar for coverage eligibility. Common underwriting demands now include:
- Multi-Factor Authentication (MFA) on all access points
- Deployment of Endpoint Detection and Response (EDR) tools
- Evidence of third-party risk management protocols
- A formalized incident response plan tested quarterly
- Documentation of employee cyber awareness training
In some cases, insurers are requesting external penetration tests and real-time threat intelligence sharing as prerequisites.
“Insurance alone is no longer enough—you must prove that you can detect, respond, and recover quickly,” said Lydia Chen, Chief Information Security Officer (CISO) at a logistics firm in Singapore.
SMEs Feel the Pressure
The changes are particularly hard-hitting for small and mid-sized enterprises (SMEs), which often lack the internal resources or funding to meet new security standards.
“A year ago, we paid $9,000 for cyber coverage. Our renewal came back at $15,000—with a $500,000 coverage cap,” said Melissa Gaines, CIO of a regional medical device supplier in Ohio. “We had to outsource our entire IT audit just to stay eligible.”
Some SMEs are choosing to self-insure or join cyber risk pools, which provide a shared-responsibility alternative to traditional insurance but come with their own limitations.
Regional Disparities and Regulatory Shifts
Insurers are reportedly scaling back cyber policy offerings in higher-risk regions such as parts of Eastern Europe, Africa, and Southeast Asia, where ransomware activity and underreporting are more prevalent.
In response, regulators are taking action:
- The U.S. National Association of Insurance Commissioners (NAIC) is piloting a standardized Cyber Risk Assessment Model to guide insurers and businesses.
- The EU’s Digital Operational Resilience Act (DORA), set to take full effect in January 2026, mandates reporting of cyber incidents and proof of risk controls for financial firms.
- Singapore’s Monetary Authority (MAS) has proposed new compliance disclosures tied to cyber risk modeling and insurance adequacy.
Outlook: Market Correction, Not Collapse
Despite the volatility, industry analysts say the market is undergoing a maturity phase, not a breakdown.
“This is a natural realignment of risk, not the end of cyber insurance,” said Rajat Mehra, head of cyber risk solutions at Lloyd’s of London. “In fact, we’re likely to see a bifurcation—firms with strong controls will access favorable terms, while others will be priced out until they adapt.”
Many experts agree that cyber insurance must be viewed as a backstop—not a substitute—for proactive defense.
Sources:
- Marsh McLennan Cyber Risk Report – Q2 2025
- Allianz Global Corporate & Specialty (AGCS) – Interview and Public Cyber Risk Brief
- National Association of Insurance Commissioners (NAIC) – Policy Initiatives 2025
- Lloyd’s of London – Cyber Insurance Trends Webinar, May 2025
- European Union – DORA Regulatory Timeline
- Singapore Monetary Authority (MAS) – Consultation Paper on Cyber Insurance (June 2025)
- Check Point Research – Global Ransomware Trends 2024–2025