The cyber insurance sector in 2025 is witnessing a shift in risk dynamics as large organisations strengthen their defences against cyber threats.

Allianz Commercial’s recent Cyber Security Resilience Outlook indicates that enhanced cyber security measures and incident response protocols have helped major insured companies reduce the impact of significant cyber losses this year.

However, the expansion of digital supply chains, increasing regulatory requirements, and evolving social engineering tactics continue to introduce new vulnerabilities for businesses.

Data from Allianz Commercial’s cyber claims for the first half of 2025 (H1 2025) shows that the frequency of claim notifications remained steady compared to the same period last year, with approximately 300 claims reported.

Despite the persistent threat environment, the severity of claims has dropped by over half, and the number of large loss claims has decreased by about 30%.

These improvements are attributed to ongoing investments in cyber security, detection, and response capabilities among larger enterprises. Nonetheless, Allianz Commercial cautions that the broadening risk landscape requires continued vigilance.

Ransomware continues to be the primary cause of cyber incidents, but attackers are increasingly targeting smaller and mid-sized businesses, which often have less robust cyber protections.

The insurer projects that the total number of cyber claims in 2025 will remain stable at around 700, with an uptick expected during the year-end shopping season.

Michael Daum, global head of cyber claims at Allianz Commercial, commented that while ransomware incidents have received significant attention in 2025, the overall insured losses from such attacks have declined so far this year.

“Insureds’ increased detection and response capabilities are helping to stop some attacks at an early stage. Every step an attacker progresses, and every minute that they are in the system, the impact goes up exponentially. The cost of a ransomware attack that progresses to data theft and encryption can be 1,000 times higher than an incident that is detected and contained early,” he said.

Ransomware and data breaches drive claim values

Ransomware attacks accounted for roughly 60% of the value of large claims in the first half of 2025.

While high-profile incidents continue to affect a range of industries, coordinated law enforcement efforts and improved cyber security among large organizations are influencing the threat landscape.

The nature of ransomware attacks is also changing. There has been a move from straightforward extortion to attacks involving data exfiltration.

In the first half of 2025, 40% of the value of large cyber claims involved data theft, up from 25% in 2024. Claims involving data exfiltration were more than twice as costly as those without.

The average global cost of a data breach reached nearly US$5 million in 2024, influenced by stricter data privacy regulations.

The retail sector has become one of the most affected industries, ranking third in terms of claim value over the past five years, following manufacturing and professional services.

Retailers’ exposure is heightened by high transaction volumes, extensive personal data handling, and the potential for business interruption. The sector’s broad network of staff, suppliers, and IT systems increases its vulnerability to cyber extortion.

Non-attack incidents, such as improper data handling and technical failures, made up a record 28% of large claims by value in 2024.

Organisations are also managing risks associated with digital supply chains, evolving privacy laws, and a rise in social engineering attacks that involve impersonation of company personnel.

Asia-Pacific sees increased claims and resilience challenges

The Asia-Pacific region recorded the highest number of cyber attacks in 2024, with a 13% increase year-on-year and accounting for 34% of global incidents, according to IBM. AON reported a 22% increase in cyber insurance claims in the region for 2024.

Ransomware was responsible for all of Allianz Commercial’s cyber losses in Asia during the first half of 2025.

Karlis Trops, head of cyber & tech professional indemnity at Allianz Commercial Asia, noted that many organisations have established their complex supply chains and outsourced critical business functions in Asia.

“While organisations recognise third-party and supply chain risk, in practice, this is a challenge to mitigate and requires significant cross-functional collaboration internally, from the IT, procurement, to legal and compliance departments,” he said.

In recent years, Allianz Commercial has observed a rise in claims linked to IT supply chain issues, including both cyber attacks and technical malfunctions.

“As a result, there continues to be an uptick in contractually driven cyber insurance purchases,” Trops said. “Businesses in Asia, in particular large companies, have also shown an increase in cyber resilience and appetite for cyber risk transfer solutions, although their overall cyber coverage is generally lower compared to American or European peers.”

Trops also noted that many large organisations and smaller enterprises in Asia remain self-insured, leaving them more exposed to cyber risks.

He advised that companies with operations in Australia, the US, and the UK should consider multinational cyber insurance solutions due to the higher potential for financial losses from privacy-related litigation and data breaches.

Jarrod Schlesinger, global head of financial lines and cyber at Allianz Commercial, said the worldwide cyber insurance sector is expected to surpass US$30 billion by the decade’s end, more than doubling its current size. Despite this projected growth, overall adoption rates remain modest.

“We need to underline that cyber insurance plays an important role in helping build resilience at a time of rapid technological and regulatory change. Many companies remain unaware of the breadth of coverage offered, which can include costs associated with breach response, business interruption, and regulatory fines and penalties,” he said.