Cyber Insurance Market Expands as AI and Financial Fraud Reshape Risk Landscape

The U.S. cyber insurance market in 2025 continues to evolve, marked by decreasing premiums, increased capacity, and expanding coverage limits—even as cyber threats grow more sophisticated. Carriers are competing on price and value-added services, offering limits up to $15 million and including tools like EDR and MDR to retain market share. Yet the market remains highly volatile, shaped by inconsistent underwriting standards and increasing claims severity from socially engineered fraud and vendor-driven losses.

Financial fraud, particularly business email compromise and social engineering schemes, remains the most frequent source of cyber claims. AI has rapidly accelerated the phishing threat, with generative tools enabling highly personalized and convincing attack vectors. Industries previously thought of as low-risk—such as construction and manufacturing—are now frequent targets due to their handling of high-value wire transfers and relatively weak cybersecurity defenses.

Adjusters should note that many cyber losses are no longer driven solely by data breaches. Instead, financial manipulation and system outages triggered by third-party vendors and software providers are becoming leading causes of complex, costly claims. As AI reshapes both attack and defense strategies, cyber insurance policies will likely require ongoing adjustments. Areas like AI liability, data poisoning, and biased algorithms remain ambiguously covered, often sitting outside traditional cyber policies.

For brokers and claims professionals, the message is clear: educate clients, push for layered coverage, and stress the importance of risk management tools. As cyber risk becomes ubiquitous across all sectors and business sizes, insurance adjusters must stay ahead of both technical developments and shifting policy language to serve insureds effectively in this maturing market.