Cyber-Security 2026 & Insurance
Written by Brian O’Connelli:
Estimated reading time: 7 minutes
The U.S. cyber insurance sector is expected to grow in 2026, driven by a rising tide of cybersecurity breaches, with average data breach costs approaching $4.5 million for impacted companies.
Overall, the cyber insurance market was valued at $20.56 billion in 2025, with 62% of companies holding policies. That figure is up from 49% in 2024.
How is the industry stacking up in 2036, and what should consumers know about the cyber insurance market? Here’s a point-by-point overview of the key issues affecting the sector.
The Need for Cyber Insurance Is Growing
In the age of ransomware, every industry is exposed to potentially crippling cyber-attacks.
“While certain industries like healthcare tend to have greater focus due to more sensitive data types and increased regulatory scrutiny, any company can be shut down by a cyber-attack,” said Erik Tifft, head of products at BOXX insurance, part of Zurich Insurance Group.
Even if a company’s work doesn’t rely on computers, almost all support functions for business do. “If payroll cannot be processed and customers cannot be scheduled or billed, all work will grind to a halt,” Tifft noted. “Without the proper cyber policy in place, an uncovered event can be devastating.”
While hospitals and banks are often targeted by data fraudsters, fraudsters have widened their scope and now strike unsuspecting companies that haven’t addressed the growing threats.
“Our team has observed that 60% of mid-sized companies have no defense against hi-tech break-ins,” said Rami Sneineh, owner at Illinois-based Insurance Navy Brokers. “One of my clients once lost a month of profits after being locked out of their computer system by a single link. Some people say that you should never pay ransom money, but I’ve witnessed an expert negotiator rescue a corporation.”
Coverage Tools Are Expanding.
Cyber insurance policies for businesses typically include coverage for breach notification, investigations, and regulatory fines, but they often leave common coverage gaps.
“Policies have changed over time to address these issues,” said Dara Gibson, CEO at Arizona-based Cybersecurity Readiness Advisors. “Many cyber insurance policies will include ransom payment and data suppression coverage. The policy will also include business interruption coverage and contingent business interruption coverage, should a third-party provider go down and cause business downtime.”
Still, even with solid progress, the cyber insurance market has unfinished business, policy-wise.
“Cyber coverage offered as an endorsement or added on to other lines of coverage, like general liability, are often lacking in one or more major areas that aren’t always apparent until the worst happens,” Tifft said.
Tifft notes that businesses should prioritize a robust “all-in-one” cyber policy that integrates insurance with proactive tools.
“Look for policies that include 24/7 incident response along with complete coverage for breach notification, business interruption, regulatory actions, and network security and privacy liabilities,” he said. “Complete cyber policies will also address the risk of cybercrime, which is theft of money or products through social engineering or via cyberattack.”
Cyber industry specialists are also evaluating a range of potential coverage models, including embedded insurance, real-time pricing, and automated claims, as well as the impact of emerging technologies on consumer and business protection.
“Discussions at recent cybersecurity conferences focused especially on real-time pricing, which will change monthly based on the individual business vulnerabilities,” Gibson said. “Another policy viewpoint is embedded insurance in software programs. I also think that AI will enhance the claims programs, for example, file and process smaller claims in a timelier manner.”
The Technology is Advancing Quickly
Some insure-tech specialists say they’re viewing the cyber insurance landscape through the lens of systemic risk. “Basically, insurers are currently flying blind because they don’t see the underlying infrastructure dependencies of the companies they insure,” said Kaveh Ranjbar, co-founder and CEO of St. Andrews, Scotland-based Whisper Security.
Ranjbar’s outlook on the cyber insurance sector focuses on these main drivers.
On future evolution: from annual audits to real-time pricing
The era of the ‘annual security questionnaire’ is ending, and in 2026, companies and consumers will see a major shift toward continuous underwriting.
“Just as car insurance now uses telematics to price driving behavior in real-time, cyber insurers will start ingesting live infrastructure telemetry,” Ranjbar said. “If a company’s ‘Infrastructure risk score’ spikes, because they spun up unsecure servers or their ISP was hijacked, their premium should adjust dynamically”.
In that instance, the future model isn’t a static policy. “Instead, it’s a parametric contract linked to the verified stability of the client’s internet footprint,” he noted.
On ransomware and business Interruption: The “blast radius” problem
Current cyber insurance policies often fail to account for dependency risk. “A company might be secure internally, but if their DNS provider or a critical API partner goes down, they suffer,” Ranjbar said.
Business interruption is on the docket
Insurers are struggling to model the situational ‘blast radius’ (e.g., the potential total extent of damage, data loss, or system disruption an attacker can cause after gaining an initial foothold in a network or system). issue in 2026.
“We expect to see policies evolving to mandate supply chain observability, requiring policyholders to prove they aren’t just monitoring their own servers, but are actively monitoring the resilience of the external vendors they rely on,” Ranjbar added.
On AI and deepfakes: insuring against synthetic reality
Insurance policies are rapidly adapting to cover social engineering fraud driven by AI deepfakes, such as a fake CEO video call requesting a wire transfer.
However, insurers will soon demand better controls than just ‘training. “They’ll require technical proof that companies are monitoring for the infrastructure signatures of these attacks, such as typo-squatting domains registered by attackers to launch these campaigns, before they will pay,” Ranjibar noted.
Go Beyond Basic Policies
Cyber policies have typically covered the major expenses associated with a ransomware events and related violation of data privacy laws, but now they’re expanding service options.
Some providers continues to innovate by offering broadened policy language to better address gaps in coverage. “When it comes to business interruption, for example, coverage has evolved to include the full supply chain, thus protecting businesses if a product supplier (not just a service provider) is hit by a cyberattack,” Tifft said.
In response to data attacks, more insurers now offer affirmative coverage for threat actors who corrupt or manipulate data sets rather than just stealing them, Tifft added. “Some nextgen policies also now feature “First Party Each and Every Loss,” which restores the aggregate limit after each incident, ensuring a business isn’t left unprotected after a single large claim,” he added.
On the individual cyber insurance front, the availability and limitations of coverage for individuals, freelancers, influencers, and creators are also being addressed, enabling individuals to better protect personal data, online identities, and digital assets.
“Individuals, freelancers, influencers, and creators now have access to personal cyber insurance policies and/or new programs with specialized producers that can provide cyber services and financial risk coverage,” Gibson noted. “Specific programs such as Cloaked can provide data deletion, which assists in identity protection.”
How Cyber Insurance Will Grow In the Next Decade
Industry professionals fear that cyber insurance is creating a false sense of security going forward.
“Cyber insurance policies are often issued without a clear understanding of the insured organization’s actual technology and security controls,” said Paul Perry, a risk advisory and assurance services expert at Warren Averett in Birmingham, Ala. “Yet there is a difference in having control and the control operating effectively over time.”
This scenario creates a dangerous disconnect as organizations believe they are protected, insurers believe controls exist, and neither side has validated reality. “When incidents occur, coverage disputes reveal the truth – controls were misunderstood or non-existent,” Perry said.
He believes the insurance industry must shift from static, point-in-time questionnaires to risk-based assessments and ongoing control monitoring to ensure policies are enforceable and coverage expectations exist.
“This shift would benefit everyone,” Perry noted. “Insurers gain better underwriting and fewer contested claims. Organizations gain clarity and realistic expectations. Boards gain confidence that cyber insurance is aligned with actual risk and not assumptions.”
Over the next decade, the insurance industry is transforming its products in several ways to continue supporting business innovation.
“We’re going from reactive insurance to a proactive risk management strategy where the insurer acts as a security partner,” Tift said. “Insurance is becoming part of a complete digital risk package that includes real-time threat monitoring and extensive consultations.”
Furthermore, as technologies like AI, blockchain, and IoT mature, unique and even alarming situations will become the new normal. “Policy verbiage will need to evolve to be more straightforward and accessible, eliminating the guesswork for insureds regarding what is actually covered in order to provide real value,” Tifft added.
