Cyber Premiums Reach $9.5 Billion as Policy Counts Surge

By Nathan Brooks

Direct premiums written for U.S. cyber insurance totaled about $9.5 billion in 2025, including premium from surplus lines insurers domiciled outside the United States, according to the National Association of Insurance Commissioners (NAIC).

Domestic direct premiums written reached nearly $7.5 billion, up from $2.75 billion in 2020. NAIC said that nearly tripled the domestic market in five years. The broader $9.5 billion total rose 3.5% from 2024.

Premium growth and policy growth diverged

NAIC found that more than 60% of U.S. cyber premium comes from primary cyber policies. Yet most policies are endorsements attached to other commercial lines. The association described that pattern as “reflecting the widespread practice of bundling modest amounts of cyber protection into other commercial lines rather than purchasing dedicated coverage.”

NAIC described endorsements as high-volume policies that generate low premiums. The overall number of domestic policies in force rose 33% in 2025 from 2024, reaching about 5.8 million.

NAIC broke the policy-count growth down by type. Endorsement policies increased 53.8%, primary policies rose 13.6%, and surplus policies fell 45.3%.

Endorsements accounted for 4% of direct premiums written in the cyber market but nearly 53% of policies in force in 2025. For brokers and corporate risk managers, NAIC's figures show why policy-count growth does not translate one-for-one into premium growth: endorsements dominate counts but contribute only 4% of direct premiums.

Two markets now sit inside cyber insurance

NAIC noted: “U.S. cyber is becoming two distinct sub-markets: a surplus lines market writing primary and excess cyber-specific policies, and an admitted market focused on endorsements to other commercial policies.” The association said surplus lines carriers now hold nearly two-thirds of all cyber premium.

The division changes how practitioners should read headline growth. NAIC's figures place most premium in the surplus lines market, where carriers write primary and excess cyber-specific policies. Meanwhile, endorsements account for nearly 53% of policies in force.

Rates fall as claims severity rises

NAIC said cyber insurance pricing continued to decline even as the market's loss ratio worsened. The first quarter of 2026 marked the eighth straight quarter of rate reductions. NAIC put the cyber loss ratio at 53 in 2025, up from 48.7 in 2024.

Claims severity increased for large and medium-sized businesses in 2025. Claim frequency fell for both groups, while severity fell for small businesses, NAIC reported.

“This combination of lower frequency but sharply higher severity at the top of the market might suggest that improved underwriting selection and security controls may be reducing the number of incidents reaching a claim, even as the incidents that do occur, particularly at large organizations, are becoming noticeably more expensive to resolve,” NAIC said in the report.

NAIC's pricing and claims data point to less pressure on buyers' premium budgets even as large-company claims get costlier. A lower quoted rate does not necessarily signal less exposure for a large or medium-sized company.

The protection gap remains wide

NAIC estimated global economic losses from cyber incidents at between $1 billion and $10 billion. The association projected losses will rise, citing the rapid escalation of risk from artificial intelligence, maturing ransomware, third-party dependencies and geopolitical factors.

Insurance covers only about 1% of global economic cyber losses, according to NAIC. The association said the protection gap remains stark.

What does this change for cyber buyers?

Based on NAIC's figures, corporate risk managers and brokers face lower rates and more policies in force alongside a worsening loss ratio. Small businesses have seen claim severity fall, while large and medium-sized businesses face higher claim costs.

For buyers, the market offers lower prices and more policies in force, but not uniformly better risk outcomes. Eight quarters of rate reductions favor buyers at renewal, but lower prices do not show that claims risk has eased at larger companies. The next test is whether rates can keep falling while claims severity pushes the loss ratio higher.