Cybercrime Losses Surge, Widening Insurance Protection Gap for SMBs…

Event summary

U.S. cyber-related losses reached nearly $21 billion in 2025, up from $16 billion in 2024, with over 1 million incidents reported.
Average cyber claim severity among large U.S. businesses more than doubled to over $4.4 million in 2025, despite a 34% decline in claim frequency.
Cyber insurance adoption among small and mid-sized businesses remains low at 10% to 20%, with many lacking dedicated cybersecurity budgets.
AI-powered phishing and social engineering tactics contributed to nearly $893 million in losses associated with AI-driven incidents in 2025.
Global cyber insurance premiums are projected to reach $16.4 billion in 2026 and $17.1 billion in 2027, with North America accounting for roughly two-thirds of the market.

The big picture

The rising cost and complexity of cybercrime are outpacing the adaptive capacity of many businesses, particularly small and mid-sized enterprises. While the commercial cyber insurance market remains strong, low adoption rates among SMBs highlight a significant protection gap. The strategic tension lies in balancing the financial and operational challenges posed by cyber threats with the need for comprehensive risk management strategies that integrate prevention, preparedness, and insurance coverage.

What we're watching

Claim Severity: How the doubling of average cyber claim severity will impact insurance underwriting and pricing strategies.
AI Threats: The pace at which AI-powered cyberattacks will evolve and the corresponding defensive measures by insurers and businesses.
Regulatory Landscape: The impact of evolving cyber incident reporting requirements and state-level AI regulations on the insurance industry.