Demand for cyber insurance coverage remains strong and is anticipated to continue as more individuals and businesses consider the growing future risks.

This is the view of a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry.

AM Best is maintaining its stable outlook on the global cyber insurance segment, as demand for coverage remains strong and is anticipated to persist.

Best’s special report, Market Segment Outlook: Global Cyber Insurance, states that although cyber insurance market conditions have softened since 2023, a major opportunity for market expansion still exists as awareness and adoption of cyber insurance continue to rise, particularly among small and medium-sized enterprises.

Profitability is also expected to continue over the intermediate term despite ongoing competitive pressures.

Robert Gabriel, a senior financial analyst at the company, observed: “Fundamentally, the market’s expansion is underpinned by increasing awareness of cyber-risk and the need for risk transfer solutions to protect against the growing threat of cybercrime.

“Heightened awareness of cyber threats also has motivated insureds to strengthen their cyber hygiene, leading to more robust defences and swifter incident responses, which in turn has helped to reduce potential losses.”

Other factors underpinning the stable outlook include the continued capital support and expansion fuelled by reinsurers and, to some extent, alternative capital providers.

But in addition, regulatory and compliance requirements are driving higher cyber insurance adoption, and, artificial intelligence-driven risk selection and underwriting builds in efficiencies.

The report notes that systemic risks from large-scale cyber incidents remain a concern due to the interconnectedness of digital systems and the potential for cascading losses across industries.

The AI-driven proliferation of cyberattacks also can increase the scale and complexity of attacks. Additionally, the ongoing challenge of ransomware, business e-mail compromise and funds transfer fraud continues to escalate.

This report and another, US Cyber: Pricing Cuts Bring First Ever Reduction in Direct Premiums Written, are available at www.ambest.com.