Cyber market tightens as VCIA experts urge cross-functional defence

The dynamics of the cyber risk market are evolving fast, a panel of experts agreed, as they highlighted the fact that claims are escalating fast and underwriting scrutiny is tightening as a result. And captives are increasingly being used as a strategic tool to manage these risks.

Those conclusions were shared by panel of industry leaders, in a debate titled “Cyber Insurance: Trends, Strategies, and Cross-Functional Collaboration”, which took place at the Vermont Captive Insurance Association conference, taking place in Burlington, Vermont, this week.

Moderated by Kimberly Guerriero, principal and consulting actuary at Milliman, the panel featured Robert Parisi, executive vice president at Munich Re; Raymind Cruz, client technology advisor at RSM US; and Dejon Cheri Delpino, senior associate attorney at Marks, O’Neill, O’Brien, Doherty & Kelly.

Parisi set the scene by noting that global cyber insurance continues to expand faster than most other commercial lines, even after three years of soft market conditions. Ransomware and privacy breaches remain the primary drivers of loss, while regional growth is strongest in Europe and Asia.

He pointed to a shift in demand patterns: large corporates increasingly seek multi-year policies and guaranteed renewals, anticipating a market hardening, while mid-market buyers remain divided between cost-driven and multinational approaches. Silent cyber — previously embedded in property policies — is being excluded and re-written as explicit cyber cover.

Cruz reported that ransomware still accounts for over half of breaches, with phishing and social engineering schemes becoming more sophisticated through AI tools. He highlighted new dangers such as AI-driven voice cloning, third-party vendor vulnerabilities, and insider threats linked to uncontrolled use of transcription and generative AI tools.

Delpino described an increasingly fragmented regulatory environment, with some US states tightening data protection laws even as federal enforcement wanes. This divergence creates compliance challenges, especially for organisations operating across jurisdictions or holding data on EU citizens, who fall under GDPR protections regardless of the company’s location.

Parisi added that GDPR fines — rather than lawsuits — are proving a significant financial hazard, with European regulators targeting business models that rely on consumer data retention.

Delpino emphasised the importance of using captive board meetings as opportunities to gather senior decision-makers from IT, legal, HR, and risk management to align on cyber strategy. She cautioned that when placing cyber risk in a captive, companies must ensure continued access to essential incident response vendors often bundled with commercial policies.

Cruz observed that cyber insurance applications have become far more detailed, now requiring proof of security controls such as backup testing, vulnerability management, and endpoint detection and response (EDR) systems. Some insurers are conducting external scans or scoring applicants’ cyber posture, with results affecting premiums.

Delpino warned that inaccurate application responses — for example, overstating training frequency — can jeopardise claims, while Parisi noted a market shift towards assessing resilience and incident response readiness rather than perimeter defences alone.

Cruz stressed the need for integrated business impact analyses, incident response plans, business continuity, and disaster recovery frameworks, all tested through annual tabletop exercises. Carriers are increasingly offering support for such exercises, Parisi confirmed.

Delpino concluded that strategic layering of commercial and captive cyber cover can balance cost control with the operational necessity of immediate, expert breach response.

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