As we look ahead in 2025, insurers across the globe are grappling with emerging risks, evolving consumer expectations, and the relentless pace of technological advancement. According to a report by the Bank of England and Financial Conduct Authority, the insurance industry is outpacing its financial services counterparts with a remarkable 95% adoption rate of AI, compared to other sectors such as financial market infrastructure, where only 57% of firms are currently using AI.

The breakneck speed and convergence of cyber threats, automation, and innovation present both challenges and opportunities that are reshaping the insurance sector over the next 6-12 months. Based on the conversations with clients so far, I’ve picked out the key emerging cyber trends across the insurance sector that I’ll be keeping an eye on in 2025 and beyond.

Top cyber threats to insurers

As insurers continue to digitise and embrace new technologies, it’s not surprising that cyberthreats have continued to evolve, and AI-powered cyberattacks are no exception as the technology’s adoption accelerates. Among the most common examples are deepfake fraud, automated phishing, and adaptive malware – all of which make businesses increasingly vulnerable to convincing impersonation scams and sophisticated cyber intrusions that are difficult to detect. Fraudsters can even use AI to mimic voices, forge documents and bypass traditional authentication measures making identity theft and claims fraud more difficult to detect.

Higher success rates for cybercriminals means increased financial and reputational risks for insurers and their clients alike, as well as a rise in the volume of claims. For insurance providers, this not only creates more strain on their own systems, but also increases complexity as clients seek coverage for business interruptions, data breaches, identity theft and cyberattacks.

An opportunity to grow smarter

In response to new sources of cyberthreats, insurers have increasingly been investing in their own technology and systems to develop smarter fraud detection models and create more tailored policy offerings that are adjusted for risk. According to Forrester’s 2025 insurance report, insurance tech spend across the sector is up overall, with an 8% boost from 2023. Insurers are increasingly requiring policyholders to implement robust cybersecurity measures – such as multi-factor authentication (MFA), endpoint detection and response (EDR), and regular employee training on phishing threats – before granting coverage.

Some providers are introducing co-insurance clauses, where businesses must share a portion of the financial burden, and sub-limits that cap payouts for ransomware-related claims. Additionally, insurers are leveraging AI-powered risk assessments and cybersecurity audits to evaluate an organization’s resilience before issuing policies. As regulatory scrutiny over ransom payments increases, some insurers are even excluding ransom reimbursements or offering incentives for companies that refuse to pay attackers, pushing businesses toward stronger preventive strategies rather than reactive payouts.

Collaboration across the ecosystem

The last year saw a sharp rise in fraudulent claims, with 84,400 detected claims with £1.1 billion in 2023, a 16% increase according to data by the Home Office.

In light of the new data, stakeholders across the ecosystem have mobilised in a collaborative effort to meet the growing challenges of fraud and cyber threats with a more united approach. A new Joint Fraud Taskforce launched in October 2024 set its sights on helping to crack down on insurance fraud, engaging participation from across government, law enforcement and insurance industry organisations – including the National Crime Agency (NCA), City of London Police, Association of British Insurers (ABI), Lloyd’s, and more. Their voluntary charter details the unified effort across the industry to create a safer, more secure insurance landscape for both insurers and their policyholders alike.

As we move further into the year, the industry’s resilience will hinge on the continued collaboration across this broader ecosystem. 2025 will be a huge opportunity for insurers, brokers and technology experts to leverage new and existing partnerships to build upon the progress made across AI adoption, embedded insurance and cross-collaboration initiatives spanning the insurance landscape more broadly. Mobilising the power of technology, bolstering regulatory frameworks, and leveraging shared expertise, insurers can stay ahead of emerging cyber threats while refining their risk models. The collective commitment to innovation, security, and proactive measures will ensure that the sector can effectively address current challenges and while remaining agile to respond to future threats.