What's Happening?
Forrester's Predictions 2026: Insurance report anticipates a 15% growth in cyber insurance next year, driven by increasing AI-related threats. The report highlights that while the cyber insurance market
experienced rapid growth from 2017 to 2022, it has since matured. However, the widespread use of AI is expected to reignite demand. Insurers are encouraged to adopt a proactive role in cyber defense, offering risk mitigation tools and new underwriting models to manage AI-related risks. Additionally, the report forecasts that three major property and casualty insurers will double their customer experience (CX) investments in 2026 to rebuild trust and improve retention. Customer satisfaction scores for auto and home insurers in the US and Canada have reportedly declined in 2025, prompting a need for more transparent rate explanations and personalized policy options.
Why It's Important?
The anticipated growth in cyber insurance underscores the increasing importance of managing AI-related risks in the insurance industry. As AI technologies become more prevalent, they introduce new vulnerabilities that insurers must address. This shift not only impacts the insurance sector but also affects businesses and individuals who rely on these technologies. By enhancing their cyber defense capabilities, insurers can better protect their clients and themselves from potential losses. Furthermore, the focus on improving customer experience reflects a broader industry trend towards customer-centric strategies, which are crucial for maintaining competitiveness and customer loyalty in a rapidly evolving market.
What's Next?
Insurers are expected to enhance their cyber defense strategies and develop innovative underwriting models to address AI-related risks. The report suggests that insurers should also focus on improving customer education, simplifying onboarding processes, and designing affordable, modular products that cater to the gig economy. As the gig economy is projected to exceed $600 billion by 2025, there is a significant opportunity for insurers to expand their offerings in this area. Additionally, insurers will need to invest in AI-driven operational efficiencies and CX differentiation to stay ahead of the competition.
Beyond the Headlines
The rise of AI-related risks and the corresponding growth in cyber insurance highlight the ethical and legal challenges associated with emerging technologies. Insurers must navigate these complexities while ensuring compliance with regulatory standards. The expansion of microinsurance offerings for gig and freelance workers also raises questions about the adequacy of existing insurance frameworks to accommodate non-traditional employment models. As the industry adapts to these changes, it will be crucial to balance innovation with consumer protection and regulatory compliance.
