The International Association of Insurance Supervisors and the Financial Stability Institute have published a joint assessment of the cyber insurance market, finding that coverage has failed to keep pace with rapidly expanding cyber threats. Only about 1% of global economic cyber losses are insured, with the protection gap particularly acute for small and medium-sized enterprises and emerging markets. The global market reached USD 15.3 billion in gross written premiums in 2024, double its 2020 level, but growth has since slowed despite rising exposure. Accumulation risk is identified as the most pressing underwriting concern because cloud outages, ransomware, shared software vulnerabilities and critical infrastructure attacks can generate correlated losses across policyholders, insurers and business lines. Frontier artificial intelligence could amplify the speed and scale of attacks, although defensive deployment may improve vulnerability detection. The note calls for risk-based pricing, disciplined underwriting, clearer treatment of affirmative and non-affirmative cyber coverage, robust stress testing and closer monitoring of third-party dependencies. Closing the protection gap will require coordinated action by insurers, supervisors and governments to improve cyber hygiene, product accessibility and risk awareness. Public-private arrangements may be needed for systemic or otherwise uninsurable risks, but government support should be clearly limited, retain private-sector risk exposure and be linked to strong cybersecurity standards.

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