Cyber insurance at inflection point amid rising AI-driven threats and falling premiums

S&P Global Ratings warns that the global cyber‑insurance market is at a critical juncture. Increasing digital threats, spurred by artificial intelligence and heightened geopolitical tensions, are coinciding with several quarters of declining premiums, squeezing insurers' combined ratios.

The agency outlines two possible paths: insurers could implement modest price increases to offset higher loss costs and keep profitability, or insufficient pricing could lead to technical losses, prompting steeper premium hikes and tighter coverage. Reinsurance continues to underpin the line, with a large share of risk transferred to reinsurers. Meanwhile, cyber catastrophe bonds remain a tiny segment, accounting for roughly 1.3% of the worldwide catastrophe‑bond market.