Cyber risk has always been dynamic, but the pace of change in the last few years is clearly accelerating. While past underwriting and claims management strategies depended on broad patterns — such as the frequency of breaches or size of average losses — the road ahead is going to demand both precision and flexibility.
A few recent trends highlight exactly what insurers and risk professionals should be aware of to prepare for what comes next.
Greater precision can lessen exposure
One of the most disruptive shifts in the cyber insurance market has been the explosion of class action lawsuits. While regulatory penalties and business interruption losses once dominated the conversation, the threat of litigation is now a defining feature post-breach.
Thankfully, new forensic tools are shifting the equation and bringing more nuance into cyber incident analysis. Parsing out what personal information was truly compromised in a particular breach — versus data already circulating on the dark web — could help limit a breached company's potential liability when previously exposed data is misused. The precision can also help guide the company's mitigation strategy accurately.
Given the changes in how breaches are litigated, cyber policies and coverage models will need to continually evolve. When weighing cyber resilience, underwriters may increasingly consider an insured's legal readiness, in addition to the technical security controls in place.
Meanwhile, claims teams should prepare for more aggressive breach responses using data-driven tools to help limit legal exposures.
Examining the cost of complexity
The advancing sophistication of third-party breaches is another trend. While the number of third-party breaches has receded from the historic highs of the past couple of years, the effect of each incident is amplified given how modern businesses rely on vendors. Successfully breaching a single vendor can give attackers access to the data of dozens — and sometimes hundreds — of downstream organizations.
Given the number of organizations involved in a single incident, unwinding third-party breaches can be incredibly complicated. Compromises of managed service providers, cloud platforms and specialized software vendors have demonstrated how a breach cascades throughout an entire supply chain.
When losses aren't confined to a single policyholder, third-party breaches can trigger disputes among multiple insured organizations, partners and carriers. As companies debate who bears responsibility for damages, the complexity of the breach often prolongs claims resolution and adds strain to relationships.
Moving forward, risk professionals will need to consider detailed assessments of supply chain exposure in their underwriting. When reviewing incident response plans, policyholders and their insurers should consider how a breach at a critical service provider might ripple across the industry, affecting operations. Cyber risk assessments might also take a page from catastrophe modeling in property insurance, focusing not only on the likelihood of an event but also examining the interdependencies that might make it even more damaging.
Uncovering emerging cyber markets
While the future holds new challenges, there are also new opportunities for insurers willing to get creative. Extending cyber insurance into markets where coverage has rarely been seen is one such innovative approach.
Connected cars is one area experiencing rapid growth. Two out of every three cars sold today feature embedded connectivity, and industry observers project it will reach nearly 100% of cars sold by 2030 — just four years from now. If a vehicle's operating system were to be compromised, it could not only expose the owner's personal information and vehicle details, it could also affect public safety.
Some forward-looking carriers are beginning to experiment with cyber add-ons tied to personal auto coverage. The model is similar to usage-based telematics insurance programs — which have gained traction over the past decade. Just as some drivers were willing to exchange driving data for premium discounts, security-minded policyholders may be open to sharing insights into their digital behaviors in exchange for proactive protection.
These new personal cyber offerings can help diversify portfolios and address a rapidly expanding risk landscape. Yet, insurers should be ready for questions about privacy and liability as more personal data becomes part of the underwriting and claims process. Lessons learned from past telematics programs about transparency, opt-in design and clear policyholder education will prove critical in this next phase.
Insurers that can balance innovative coverage with sound risk management will find themselves in the driver's seat for these new growth engines.
Balancing risk and growth in 2026
As insurers plan for 2026, they should look to conduct risk assessments with a sharper eye for both systemic exposures and new avenues for growth. Success will be found by those that combine legal strategy with technical precision, map the intricacies of supply chain risk and capitalize on new opportunities with products for security-focused consumers.
The future of cyber coverage may be defined as much by creativity as by technology. Insurers who recognize this dynamic and embrace it will be best positioned to navigate the year ahead.
This article is adapted from the TransUnion e-book 2026 Cyber Protection Challenges and Opportunities.
