Cyber insurance in 2025: What every business needs to know

On average, Indian companies were subject to 2,807 weekly cyberattacks in early 2024. Alarmingly, this figure marks a 33% jump from the previous year. 

Since we live and operate in a digital-first era, we are faced with increased cyber risks. We have witnessed first-hand the financial and reputational damage cyber incidents can inflict on businesses, especially the small-scale ones. 

That is why it is essential to safeguard their brand presence and customer trust by getting comprehensive cyber insurance.

However, getting a policy will not be enough if businesses do not know that cyber insurance can help them.

As cases of cyber threats and regulatory expectations rise, let's discuss the important things to remember about cyber insurance.
What is cyber insurance for businesses and what makes it crucial?

Cyber insurance can be best described as a policy that covers losses and liabilities arising from cybersecurity gaps. Unlike traditional insurance, these coverages address digital risks, such as ransomware attacks, data breaches, digital frauds, phishing attacks, and even system outages. 

Data shows that organisations face a ransomware attack every 11 seconds. This puts all businesses, especially small-scale ones, at major financial and reputational risk.

Typically, cyber insurance for businesses covers notification costs and credit monitoring on behalf of affected companies. In addition, it covers legal expenses as well as regulatory fines and losses from identity theft. 

Some comprehensive plans may also cover the cost to restore IT systems and data. This way, comprehensive cyber insurance helps mitigate both financial and reputational threats accompanying cybersecurity gaps. 

How do insurance companies assess cyber insurance coverage?
As concerns related to digital threats and cyber frauds grow, the cyber insurance market in India is witnessing a gradual uptick in demand. Estimates show that India’s $582m cyber insurance market could become a $6.9b market by 2033, registering a compound annual growth rate of 29%. 

Interestingly, this demand for comprehensive cyber insurance is fuelled by a shift to digital payments, cloud adoption, IoT devices, e-commerce digitisation, and regulatory compliance pressures. Keeping this trend in mind, insurance companies are offering coverage that is not a one-size-fits-all solution.

To customise coverage, they assess the industry of the policy buyer, as different sectors have different risks. 

For instance, finance and healthcare are susceptible to higher risks. Insurance companies also factor in the volume and sensitivity of data that the businesses regularly handle. Besides these, they check the company’s history of cyber incidents, existing cybersecurity measures, and risk management protocols.

We have seen that typically, businesses with better security practices often manage to secure lower premiums and broader coverage. However, obtaining a cyber policy or ensuring claim settlement is not necessarily simple.

Navigating policy complexities and claim rejections
Unfortunately, cyber insurance products are not immune to fraud. Scams such as providing false information in policy documents, staged cybercrimes, and double-dipping with more than one insurance company have become quite common. 

These frauds have a negative impact on all policyholders and lead insurers to inflate premiums. On the other hand, factors such as failure to meet security norms or policy terms, delay in reporting, and a lack of documentation often lead to claim rejection.

In some cases, claims are rejected because of policy exclusions or incorrect information. That’s why it is important to read and understand the policy fine print carefully.

How to maximise cyber insurance benefits
In order to secure a comprehensive cover and fast claim resolution, businesses must ensure a few things throughout the policy term. 

To begin with, businesses should conduct regular cybersecurity checks and assess underlying risk. They must implement security measures such as firewalls, encryption, and employee training programmes. 

Companies that have a cyber insurance policy must maintain detailed records of security protocols and past cyber incidents. We suggest they voluntarily review and update their coverage as their operation grows. 

Lastly, they must report cyber incidents quickly and accurately to insurance companies to initiate the claim process.

An IBM study found that the global average cost of a data breach amounted to $4.35m in 2022. That’s why it is extremely crucial to adopt strict cybersecurity practices, keep track of new threats and security trends, and, more importantly, to secure comprehensive coverage. 

However, to ensure they have adequate coverage, must check features and understand exclusions. They should remember that, just like any other policy, comparing features and scope can help them secure the best coverage for their business.