- What is cybersecurity?
- Risk, threat, vulnerability
- Role of cybersecurity insurance
- History of insurance
- What insurance covers
- Cybersecurity insurance providers
Cybersecurity is a top-of-mind priority for organizations of all types. From businesses to government agencies to non-profits, leaders must consider a growing number of cyber threats, risks, and vulnerabilities.
The cost of dealing with a cyber incident can be staggering, and so nearly every tech-related decision must be measured against its effect on the organization’s cyber risk profile.
For many leaders, their instinctive reaction to cyber threats is to obtain the best cybersecurity controls and systems their budget will allow, and that’s a wise move.
Still, that’s not enough for many businesses. These enterprises address cyber uncertainty like any other risk, and one way to mitigate risk is to acquire insurance.
This article aims to demystify cyber insurance and examines various aspects of the cybersecurity insurance market. We’ll dive into what it is, the size of the market, and what it covers.
It’s a big subject upon which volumes have been written, so here we hope to arm students, security practitioners, and business leaders with helpful information to guide their further research.
Related resources
What is cybersecurity insurance?
All organizations face uncertainty or risk, and a risk manager’s job is to guide the C-suite toward the most appropriate options for each identified hazard.
There are four basic strategies or tools for mitigating risk, and insurance is one of them.
Assume and accept: To assume and accept risk can be an intended strategy or the result of not deciding at all. If the threat is minor and the consequences relatively insignificant, an organization may decide that the cost of other mitigation strategies is prohibitive, so it just accepts the risk.
Avoid: To avoid cyber risk, organizations may decide to sidestep or cease certain risky activities. If, for example, a company identifies that they are at risk by allowing their employees to connect personal devices to the corporate network, they may enforce policies that prevent that activity, thus avoiding the risk.
Control: The billion-dollar security solutions market is built around the idea of controlling risk. Firewalls, scanners, and other cybersecurity products and services are all designed to help organizations control their cyber risk. Insurers are increasingly tightening underwriting requirements and specifying that their customers adopt security controls that can positively impact their exposure to cyber risk.
Transfer: An organization may decide to mitigate the consequences of a cyber attack by transferring them to another party. After willingly assuming a small amount of risk, avoiding dangerous behavior, and doing their best to control their exposure, some risk remains. Transferring that risk to an insurance company further improves an organization’s risk profile. This is the role of cybersecurity insurance.
Insurance of any kind is simply a means of protection against financial loss. It is a form of risk management and is primarily used to hedge against the losses that remain after other mitigation strategies have been applied.
Size of the cybersecurity insurance market
In the third quarter of 2024, Marsh’s Global Insurance Market Index reported a 1 percent decrease in global commercial insurance rates, marking the first quarterly decline in seven years. This downturn was primarily driven by heightened competition among global property insurers.
While regions like the Pacific, UK, and Asia experienced notable rate reductions, the U.S. saw a 3 percent increase in insurance rates.
Specifically, property insurance rates fell by 2 percent globally, financial and professional lines dropped by 7 percent, and cyber insurance rates decreased by 6 percent. Conversely, casualty insurance rates rose by 6 percent globally.
Mordor Intelligence estimates that the cybersecurity insurance market is at $19.26 billion this 2025, and is expected to reach $47.38 billion by 2030.
They cite the ever-growing connectivity of everything, coupled with a labor shortage among already strained IT and security teams, as the primary cause of the expected increase.
Understanding risk, threats, and vulnerabilities
Before choosing or relying on cybersecurity insurance, it is essential to understand the fundamentals of cyber risk. Effective protection begins with recognizing the environment you operate in:
- Risk is the potential for loss or damage when a threat exploits a vulnerability.
- Threats are the actors or events that can cause harm — such as hackers, malware, ransomware groups, insider threats, or even nation-state attackers.
- Vulnerabilities are weaknesses that make it easier for threats to succeed. This could include unpatched software, weak passwords, or inadequate employee training.
Understanding this triad — risk, threats, and vulnerabilities — allows individuals and organizations to prioritize their security efforts and choose cyber insurance coverage that matches their exposure. A good cybersecurity insurance policy will often require that you perform a formal risk assessment as part of the application process, ensuring you’re aware of where your critical gaps exist.
Because cybersecurity insurance is only one of many tools that organizations can use to manage their risk profile (a prioritized inventory of their most significant risks), it is helpful to understand a few key terms and concepts used by risk managers and insurance brokers.
These fundamental notions are Risk, Threat, and Vulnerability. In the context of security and cybersecurity insurance, the relationship between these terms can be expressed as Risk = Threat x Vulnerability, or some organizations prefer Risk = Probability x Consequence.
For example, a healthcare provider handling sensitive patient data (high risk) may face threats from ransomware gangs and insider leaks, and vulnerabilities like outdated software or unsecured medical devices could make exploitation easier.
The role of cybersecurity insurance
Business and government agencies spend enormous sums of money investing in cybersecurity protection measures and systems.
They hire teams of security professionals to operate these systems and protect against threats. Still, some risk remains.
Regardless of how diligent an organization is, there is always a chance that a zero-day vulnerability (a vulnerability that has not previously been seen in the wild) will be exploited by a threat actor. Or an employee will fall victim to a social engineering scheme.
The risks that remain even after an organization has done everything it can to prevent and mitigate threats are called residual risks.
Instead of accepting those residual risks, many organizations choose a more pragmatic approach, similar to how they address other business threats they face. They transfer the risk to an insurance company for a fee.
Cybersecurity insurance is a critical component of an organization’s cyber risk management program, just like errors and omissions or automobile insurance are components of their business risk management program. Both are designed to improve the organization’s risk profile.
The history of cybersecurity insurance
Insurers began covering some of the losses resulting from a data breach in traditional commercial insurance policies in the early 2000s.
These early policies were relatively simple and typically covered the costs of business interruption, extortion, and the loss of digital or data assets.
Spurred mainly by increased regulation and strict notification laws, organizations have expanded their cyber mitigation strategies to align more closely with how they manage other risks.
When organizations manage cyber risk in the same ways they address other perils, it makes sense for them to include insurance as one of their mitigation tools.
What cybersecurity insurance can cover
Today, cyber insurance policies offer coverage beyond data breaches. They offer protection against a broad range of cyber threats.
Some of the threats for which coverage may be available include the following.
Ransomware: Coverage is commonly available for ransomware payments and other types of cyber extortion. Bad actors often use malware to deny users access to their systems and threaten to disclose sensitive information publicly. The FBI discourages victims from paying ransoms because there is no guarantee that the hackers will remove the malicious software or restore the data.
BEC and social engineering attacks: Many cybersecurity policies cover business email compromise (BEC) and other social engineering attacks. In a classical BEC scam, hackers trick employees to make wire transfers to the hacker’s bank account using an organization’s leader’s compromised or spoofed email account. BEC scammers often target large organizations that do business globally.
Loss of business and other attack-related expenses: Loss of business income due to a cyberattack and additional direct costs, such as forensic expenses, can be covered under cybersecurity insurance policies. In some cases, policies cover the insured company for losses from an attack on a third party, such as a vendor or partner. This coverage is essential given today’s complex supply chain ecosystem.
Damaged reputation: Many companies rely on the trust of their customers, and being victimized by a cyberattack can cause a significant reduction in business for some time. Damaged reputation coverage compensates the insured for lost income caused by damage to their reputation following a cybersecurity event for a specified duration.
Corporate Identity Theft: Coverage may be available for losses incurred due to fraudulent use of the company’s digital identity. These crimes may be in the form of fraudulently established credit or illegally signed contracts.
Leadership Liability: Coverage may be available for senior executives to protect them if they are sued in connection with a covered cyber event.
Cybersecurity insurance providers
Sprinto researched 10 top cyber insurance companies and settled on a list of five as their top picks in 2024:
- AXA XL: A global insurance and reinsurance provider offering tailored solutions, including cyber liability coverage for complex risks faced by businesses.
- Chubb: Renowned for comprehensive cyber insurance, Chubb covers data breaches, ransomware, business interruptions, and provides risk management services.
- Travelers: Focuses on cybersecurity insurance for small and medium-sized businesses, providing coverage for data breaches, cyber extortion, and employee training.
- Zurich: Offers broad cyber liability insurance, covering regulatory fines, ransom payments, notification expenses, and support for diverse industries.
- AmTrust Financial: Specializes in cyber insurance for small businesses, covering data breaches, ransomware attacks, and providing accessible policy solutions.
- Beazley: Known for advanced incident response services, Beazley provides customized cyber insurance policies for network interruptions and other vulnerabilities.
- Hiscox: Provides cyber insurance for both small businesses and enterprises, offering coverage for data recovery, legal fees, and reputation management.
- CNA Insurance: Offers cyber liability insurance with coverage for data breaches, business interruptions, and crisis management services.
- The Hartford: Focused on small businesses, The Hartford offers coverage for ransomware, data breaches, and legal expenses.
- BCS Financial: Offers unique cybersecurity insurance products, including CyberBlue (large-scale coverage), Micro Cyber (for small businesses), and Nano Cyber (for self-employed individuals and agents).
Conclusion
In the short space of about two decades, cyber insurance has gone from a mostly abstract idea considered a necessity by very few organizations to an exploding business insurance segment. It has become something nearly every business leader thinks about, and many have purchased it.
As the rate and severity of cyberattacks rapidly increase, a tsunami of vulnerabilities inundates security teams, and 100 percent cybersecurity is impossible. No organization is immune to ransomware, malware, DDoS attacks, and a host of other cyber threats.
Organizations can accept the risk of financial loss from a cyberattack, avoid risky endeavors, adhere to recommended cyber hygiene procedures, and apply security control measures. Still, some risk remains.
To address residual cyber risk, many companies have turned to the same tools they have always used to combat other types of risk; this includes the transference of the risk to an insurance company.
Frequently asked questions
Cybersecurity insurance, often referred to as cyber liability insurance or cyber insurance, is a specialized insurance policy designed to protect businesses and individuals from financial losses resulting from cyber-related incidents. These incidents can include data breaches, cyberattacks, and other forms of cyber threats.
In today’s digital age, cyber threats are evolving rapidly, and the consequences of a cyber incident can be devastating. Cybersecurity insurance provides a safety net, ensuring that businesses and individuals have the financial support they need to recover from cyber-related damages.
While large corporations are often the most visible targets for cyberattacks, small and medium-sized businesses are also at risk. Any entity that relies on digital systems, stores sensitive data, or conducts online transactions should consider cybersecurity insurance. This includes e-commerce businesses, healthcare providers, financial institutions, and even individual professionals.
Cybersecurity insurance policies can vary, but they typically cover: costs related to data breach notifications and public relations efforts, legal fees and settlements arising from cyber incidents, expenses for restoring lost or corrupted data, business interruption costs due to a cyber event, and ransom payments in the event of a ransomware attack.
No. While cybersecurity insurance provides financial protection after a cyber incident, businesses and individuals must implement robust cybersecurity practices to prevent incidents in the first place. Think of cybersecurity insurance as a backup plan, not a replacement for proactive security measures.
To obtain cybersecurity insurance, start by reaching out to insurance providers that offer specialized cyber policies. They will assess your risk profile and provide a tailored policy that meets your needs.
With the increasing frequency and sophistication of cyber threats, cybersecurity insurance acts as a crucial safety net, ensuring that businesses and individuals can recover and continue operations even after a cyber incident. It’s an essential tool in the modern risk management toolkit.
Sources
- Cybersecurity Insurance Market Size & Share Analysis | From Mordor Intelligence in Apr 2025
- US Insurance Rates in Q1 2025 | Marsh in Apr 2025
- 2024 Top 10 cyber insurance companies | Sourced from Sprinto in Apr 2025