AI is changing how cyber risk must be insured, priced, and managed faster than most insurance models were designed to adapt. By 2026, this gap will be impossible to ignore. The question for business leaders is not whether AI-driven attacks will increase, but whether cyber insurance will keep pace with how those attacks are assessed, priced, and paid.
Yaron Assabi | image supplied
Underwriting is becoming continuous
One of the most visible shifts is in how cyber risk is assessed. Insurers are moving away from annual reviews. Instead, AI tools enable underwriters to analyse large volumes of telemetry and vulnerability data in near real time, providing a clearer view of exposure.
The European Union Agency for Cybersecurity has been blunt about the impact of AI on cyber risk. Losses become more systemic, more correlated, and far harder to model using the actuarial assumptions cyber insurance has relied on for years.
That shift is already filtering into underwriting conversations. Insurers are starting to probe how AI is used inside an organisation and how quickly unusual behaviour can be detected and contained.
Many cyber policies in force today were written before AI-driven attacks became commonplace. As a result, incidents involving AI-linked fraud, manipulated identities, poisoned data sets, or compromised AI systems deep in the supply chain can fall into uncomfortable grey areas.
Insurers are responding, but unevenly. Some are tightening definitions and endorsements to reflect how AI changes both attack methods and insured systems. Coalition has been among those openly acknowledging that AI risk cannot simply be implied and needs to be addressed directly in policy language.
By 2026, this will be hard to avoid. Businesses should expect more explicit questions around AI governance, approved tools, and control frameworks. That is not a move to withdraw cover. It is an attempt to remove ambiguity before a loss occurs, rather than debating intent and interpretation after the fact.
AI is also compressing the economics of incidents themselves. Automated social engineering and impersonation can move from first contact to material loss faster than most response playbooks allow.
IBM’s 2025 Cost of a Data Breach report puts the global average cost of a breach at $4.4m, a reminder of how quickly financial impact escalates once an incident gains momentum.
The insurer–client relationship will shift
The most notable change by 2026 will be relational. As AI accelerates both attack and defence, cyber insurance is moving beyond pure risk transfer. Insurers are increasingly positioning themselves as contributors to risk reduction, offering monitoring, scanning, and readiness support in addition to coverage.
For executives, this reframes cyber insurance as part of governance and resilience, rather than a standalone policy that is renewed annually. The organisations that benefit most will be those that engage insurers early, align disclosures with real AI usage, and treat cyber cover as a living component of their operating model.
AI will not make cyber insurance obsolete. It will make passive cyber insurance unworkable. By 2026, the market will reward clarity, speed, and adaptability. Leaders who recognise that shift early will be better placed to manage both the risk and the recovery when incidents occur.
