Cyber Insurance Policy & Product Trends in 2025: What’s Changing and How Small Businesses Can Prepare

The Growing Role of AI in Cybercrime 

AI-powered attacks are already making social engineering scams more convincing. 

“Threat actors are getting incredibly sophisticated – especially in fraudulent funds transfer scams,” says Christyn Yoast, President USA at BOXX. “Even at BOXX, we’ve seen attempts targeting our own employees. AI-generated voices, deepfakes, and hyper-personalized phishing emails are making scams much harder to detect. That’s why we invest in employee cyber awareness training and build a culture of rewards for reporting suspicious activities.” 

Cybercriminals are leveraging AI to automate attacks, generate realistic phishing, vishing (voice phishing) and video messages, and manipulate victims in real time – and at a larger scale than ever before. Deepfake technology has progressed to the point where scammers can impersonate executives or business partners with alarming accuracy, tricking and extorting employees into wiring funds or revealing sensitive information. 

CrowdStrike’s new 2025 Global Threat Report revealed a 442% increase in vishing between the first and second halves of 2024 as cybercriminals perfected the business of social engineering. Vishing is especially effective as it relies on human error rather than software or system vulnerabilities, CrowdStrike noted. 

“Before, you could often spot something ‘off’ in a phishing email – an awkward phrase or a slightly misspelled domain. Now, these scams employ AI and have become nearly flawless,” Yoast adds. 

AI-generated phishing messages had a 54% higher click-through rate than human-written ones (12%) in 2024, CrowdStrike reported. The question is: how will insurance policies adapt to these new, AI-enabled risks? 

Where Cyber Insurance Policy Trends are Headed 

Cyber policy wordings will increasingly need to evolve in response to emerging threats. Some key cyber insurance policy trends to watch over the coming year include:

1.  AI-Driven Cybercrime Coverage

More than half of American businesses have been targeted by deepfake financial scams, with 43% falling victim to such attacks, according to a survey by finance software provider Medius. 

And, with 93% of security leaders expecting daily AI-driven attacks will become the norm in 2025, it’s no wonder the FBI has issued warnings to businesses to defend against AI-powered cybercrime. 

Currently, many cyber insurance policies are silent on AI-related threats, treating AI as a tool rather than a direct cause of cyber incidents. However, as AI-powered attacks grow, insurers may need to clarify how their policies respond to AI-generated fraud, deepfake extortion, and automated phishing campaigns. 

“As AI plays a bigger role in scams, insurers will need to consider whether policies should explicitly address AI-driven threats,” explains Tifft. 

2. Quantum Computing and Data Security 

The global quantum computing market is expected to add over $1 trillion to the global economy between 2025 and 2035. Already, businesses are extremely concerned over this powerful technology being in the wrong hands. A survey by KPMG showed 73% of American businesses believe “it’s only a matter of time” before cybercriminals leverage the power of quantum to decrypt and disrupt today’s cybersecurity protocols. 

As quantum computing advances, it has the potential to break encryption that is currently considered secure, potentially within hours instead of years, Tifft explains.  

This poses risks to sensitive data across industries, from banking and retail transactions to corporate documents and emails. With major tech companies racing to develop quantum computing, businesses and insurers must prepare for a future where current encryption methods become obsolete.  

One growing concern is “harvest-now, decrypt-later” (HNDL) attacks, where cybercriminals steal encrypted files today and store them until quantum technology advances enough to decrypt them. The growing threat of quantum computing could lead insurers to reconsider what qualifies as ‘adequate security’ in policy language, Tifft adds. 

3. Ransomware Response Evolution 

In Q1 2024, the US became the region most impacted by ransomware attacks globally – fighting off almost 60% of worldwide attacks, according to data from Check Point Research.  

Tifft explains: “A lot of ransomware groups operate out of Eastern Europe. Depending on geopolitical changes, we could see either an increase or decrease in activity, which could impact how policies adjust to reflect evolving ransomware tactics, response mechanisms, and payment structures,” Tifft explains. With coverage options expanding, businesses investing in cybersecurity controls – such as endpoint detection and response (EDR), multi-factor authentication (MFA), and offline backups – will continue to see better policy terms. 

“Carriers are more willing to offer broader coverage and competitive pricing to businesses demonstrating strong cyber hygiene,” says Yoast. That’s because not only are ransomware attacks rising – it’s more costly and more time-consuming than ever for businesses to recover from these attacks. 

The average ransom fee skyrocketed more than 500% between 2023 and 2024, with the average recovery from an attack costing $2.73 million in 2024.  

Ransomware attacks can cause significant financial losses due to system downtime. In 2023, businesses experienced an average of 136 hours (17 business days) of operational disruption following a ransomware attack, impacting productivity and revenue. 

A strong cyber policy should cover ransom payments, system restoration, legal support and financial fraud, including social engineering, and spoofing. “These protections are essential as ransomware and cyber extortion can cripple operations and damage reputations,” Yoast adds.

Cyber Insurance Trends & Market Outlook: A Buyer’s Advantage 

As the cyber insurance market remains competitive, businesses are benefiting from improved pricing and policy enhancements. 

“The value proposition for cyber insurance remains extremely high,” Tifft explains. “It’s a classic low-frequency, high-severity risk. More businesses are recognizing that the cost of a cyber policy is far lower than the potential financial and reputational damage from an attack.”

However, while pricing remains favorable, some businesses may still struggle with prioritizing cyber insurance over other budgetary concerns, says Yoast. “For many SMEs, cyber insurance is still seen as a ‘nice-to-have’ rather than a must-have,” she says. “With economic uncertainty, businesses are carefully allocating budgets. But cutting back on cyber insurance could be a costly mistake.” Data shows that more than 75% of small businesses won’t continue operating if they were hit with ransomware. 

For businesses that invest in cybersecurity measures – such as strong IT controls, employee training, and incident response planning – insurers are offering better policy terms. “The market is rewarding businesses that take cyber risk seriously,” says Yoast. 

Bundling Insurance & Cybersecurity Solutions: A Smarter Approach 

As cyber threats grow more sophisticated over the next 12 months, small businesses should be looking for more than just traditional financial protection from their cyber insurance provider – they need a partner in proactive risk mitigation.  

“It will become increasingly essential for insurance coverage to integrate cybersecurity tools and support services, helping businesses strengthen their defenses before an attack occurs,” says Sarah Douek, Head of BOXX USA Underwriting. 

Experts recommend that small businesses ensure their cyber insurance policies go beyond standard coverage and offer proactive support, such as: 

• Incident Response and Cybersecurity Guidance: Having a dedicated team to assist during a cyber incident can significantly reduce the impact of an attack. “The ability to access expert support in real time can mean the difference between a quick recovery and prolonged disruption,” says Douek. BOXX’s CyberboxxÒ Assist, for example, provides businesses with 24/7 access to its HackbustersÒ Incident Response Team, who help contain and mitigate threats, reducing downtime and financial loss.
• Proactive Risk Management Tools: Small businesses often lack resources and budget to manage cyber risk effectively. Insurers will increasingly need to offer dark web monitoring, penetration testing and security awareness training as part of their policies. These tools help businesses identify vulnerabilities and mitigate risks before an attack occurs. BOXX’s Predict & Prevent services include cyber hygiene training and continuous risk monitoring, helping businesses spot weaknesses before they turn into major incidents.
• Retention Waivers with Breach Response: Many standard policies with retention waivers incentivize early reporting by waiving deductibles for incidents reported within a specific timeframe. While timely reporting reduces damage, some zero-deductible policies automatically log claims, affecting a business’ no-claims record. Look for policy wording with “no deductible, no claim required assistance” to access expert help without impacting long-term claims history and to minimize financial stress, Douek says.
• Risk-Based Underwriting Support: Businesses that actively invest in cybersecurity can often access better policy terms. A strong underwriting approach doesn’t just evaluate risk but also helps businesses improve their cybersecurity posture. “BOXX’s underwriting team works closely with clients to identify security gaps and ensure they have the right tools in place to reduce their overall risk exposure,” says Douek. 

What’s Next for Cyber Insurance? 

Looking ahead, the cyber insurance market will continue evolving as AI, quantum computing and emerging cyber threats reshape coverage expectations. 

“For small businesses, access to cybersecurity tools, training and expert advice through their insurer can be a game-changer,” says Erik Tifft. 

“Cyber insurance isn’t just about responding to threats—it’s about building digital resilience,” adds Christyn Yoast. “Businesses that invest in cybersecurity, stay informed and choose insurers that offer proactive risk management and incident response services, will be best positioned to thrive.”

With cyber threats growing more sophisticated, complacency isn’t an option. Understanding cyber policy trends and leveraging strong security controls are key to staying protected in 2025 and beyond.