Cyber insurance is a type of designed to protect businesses of any size from the financial consequences of attacks on their work computer systems. How will the cyber insurance market evolve into next year?
To gain an insight, Digital Journal heard from Max Perkins, Head of Insurance Solutions, Spektrum Labs .
The downward trend in cyber insurance rates has reached the danger zone
Modern business depends fundamentally on technology, which makes the risk and impact of cybercrime higher than at any time in the past. Recently, this led to an increase in cyber insurance policies being taken up. Latterly, this process has stalled and entered a decline.
According to Perkins: “Competitive dynamics have pushed insurance rates downward, exposing insurers to losses as the severity and frequency of cyber incidents aren’t flattening. The floor is coming fast, and with that, a hard landing”.
In the cyber insurance market, people, firms and capital will be reshuffled
Within the sector there is likely to be balancing act including the reallocation of specialists functions, predicts Perkins. He explains: “Missed growth targets across brokers, carriers and marketplaces will trigger talent reshuffling, M&A and internal restructuring. Expect consolidation among cyber-focused MGAs and strategic exits/de-emphasized market positions from slower-growth, traditional insurers. The market isn’t shrinking; it’s reshaping.”
Brokers will pursue cyber risk services as new revenue streams
Types of cyber threats to institution include:
- Malware.
- Ransomware.
- Distributed denial of service (DDoS) attacks.
- Spam and Phishing.
- Corporate Account Takeover (CATO)
- Automated Teller Machine (ATM) Cash Out.
This makes it a potential area for growth.
On this, Perkins says: “To offset margin pressure and create stickier client relationships, brokerages will increasingly adopt cyber risk management tooling to become more relevant to CISOs and less reliant on transactional commissions. They won’t just be advising; they’ll be monetizing value-added services.”
He adds: “The most forward-looking brokers will deliver telemetry-backed renewal packages, benchmark client posture against peers, and use continuous evidence to build stronger narratives to underwriters. This shift will make brokers more relevant to CISOs, CFOs, and boards, and less dependent on transactional placement revenue.”
Reinsurance pricing will tighten after July 1
Reinsurance involves a reinsurer taking on some portion of the risk assumed by the primary insurer (or other reinsurer) for premium charged. This is something that could slowdown mid-way through 2026.
As Perkins observes: “We’re seeing early signs of items that tend to lead to reinsurance hardening, especially in quota share treaties. We’re not just seeing it in the news but also in conversations we’re having with customers and prospects. The drivers are rising claim severity from privacy liability (e.g., wrongful collection litigation under statutes like CIPA) and sustained frequency in intrusion events. These trends aren’t just speculative; they’re being discussed in underwriter meetings and treaty negotiation prep right now.”
Telemetry, parametrics and AI agents will become critical infrastructure in the cyber insurance space
On the subject of advancing technology, Perkins considers: “Without these, the market can’t scale. Telemetry is essential to improve pricing models, quantify risk and attract capital. Carriers and reinsurers alike are demanding real-time, validated visibility into posture, patch cadence and exposure clusters.”
And for smaller enterprises, this means: “Parametric cyber coverage for Business Interruption (especially for small and medium-sized businesses) will move from pilot to early adoption. It simplifies claims, shortens tail risk, and offers transparency for both underwriters and insureds. AI agents will be needed to scale the labour-intensive workflows in brokering and underwriting – not to replace people but to support decision-making, which will enable growth. AI agents will be deployed to support, not replace, brokers and underwriters. These agents will triage submissions, synthesize risk evidence and surface key portfolio-level insights.”
