Insurance Faces $700bn Cyber Exposure as Risk Outpaces Cover

A knock-on effect of industries wrestling with intensifying cyber threats is now being felt within insurance, a sector approaching a structural turning point.

As cyber threats, climate-related losses and growing liability claims reshape the risk landscape, NTT DATA’s latest Insurtech Global Outlook 2026 report delivers a stark message: “Risk is accelerating and standing still is no longer an option”.

According to the report, cybersecurity now represents the largest source of uninsured risk globally, with losses projected to surge from US$171bn in 2023 to more than US$700bn by 2030.

This comes as climate-driven uninsured losses tied to floods, wildfires and extreme weather events have reached US$180bn, while liability claims have risen by 57%.

Together, these pressures are forcing insurers to reassess traditional business models and adopt advanced technologies to address increasingly complex risk environments.

“The insurance industry is facing structural shifts in the face of unprecedented market volatility and uncertainty,” says Bruno Abril, Global Head of Insurance at NTT DATA.

“There are, however, clear opportunities for insurers to embrace AI-driven solutions to bolster trust and resilience.

“In this report, we identify the key shifts that are shaping insurance in 2026 and translate them into actionable imperatives that can help insurers build long-term value for their businesses, their customers and society.”

AI adoption stalls on trust barriers

The sector has an urgent need for process optimisation, and agentic AI is emerging as a potential solution.

NTT DATA highlights that automation could deliver cost savings of up to 35%, yet a clear gap persists between experimentation and full deployment.

Although 66% of insurance employees already use AI tools in their daily work, only 22% of insurers have successfully scaled AI into production environments.

Notably, the obstacles are not technical. Instead, issues around governance, trust, compliance and legacy operating models are holding progress back.

Market dynamics and growth opportunities

Interestingly, US insurance IPOs have reached their highest levels in 20 years, signalling renewed investor confidence in the market.

Funding trends are also shifting, with debt financing rising to US$9.5bn and overtaking equity funding.

The report highlights partner ecosystems as a key avenue for growth.

With the embedded insurance market exceeding US$116bn in 2025, insurers are increasingly turning to collaboration, open standards and regulation-ready infrastructure to unlock new revenue streams and broaden customer access.

As cyber risks intensify and volatility continues, NTT DATA’s message is clear: insurers that adopt AI, focus on prevention and strengthen ecosystem partnerships will be best positioned to succeed in the years ahead.

Shifting towards proactive risk models

The report clearly outlines the need for insurers to move beyond traditional, reactive claims-based models toward continuous risk detection and decision-making.

As risks continue to outpace insured capacity, insurers are being encouraged to leverage data, AI and simulation technologies to identify threats earlier and act before losses materialise.

Achieving this requires becoming AI-native and embedding agentic systems into core operations. This also means deploying responsible AI at scale, with explainability, compliance and human accountability built in.

This transition reflects evolving customer expectations, with hyper-personalised insurance services expanding at more than 35% annually.

At the same time, demand for prevention-led services is rising among employers, with 67% increasing investment in preventative measures.

Consequently, insurers are being urged to deliver more empathetic customer experiences that blend personalised support with proactive risk prevention.