In 2025, cybersecurity threats like data breaches and ransomware are major risks for the insurance industry. As insurers move online, they must strengthen security measures to protect sensitive data, prevent disruptions, and maintain customer trust. The rise in cyberattacks makes robust security and proactive measures essential.
Are you aware that cybercrime increased by 600 percent during the COVID-19 pandemic? With so many people forced to work from home, cybercriminals hit the jackpot by targeting remote workplaces they could sabotage and profit from.
Fast-forward to 2025, and the trend shows no sign of slowing down. With more businesses operating online than ever before, no industry is safe from cyber threats — and the insurance sector is no exception.
Have you found yourself wondering about the cybersecurity impact on the insurance industry? Then you’ve come to the right place.
What Risks Do Insurance Companies Face?
When it comes to cybersecurity, insurance companies face unique vulnerabilities, along with the general risks that threaten all online businesses.
Let's take a closer look at a few examples.
Liquidity Risk
Liquidity refers to how easily a business’s assets can be converted into cash. Historically, insurers viewed liquidity as a minor concern. Since premiums are collected before claims are paid, liquidity was considered standard.
However, the digital era has brought new threats to liquidity.
Today, insurers interact with customers through online portals and often store assets digitally. A cyberattack could easily freeze liquidity by encrypting or blocking access to digital assets. Companies that depend on online systems for operations are vulnerable to devastating liquidity crises if their systems are compromised.
We're not suggesting you hide all your money under a mattress. But in an increasingly cashless world, insurance companies must be extra cautious to ensure fast access to their funds.
Insurance providers must stay hypervigilant, protecting not just their money, but the money entrusted to them by millions of clients. Just like banks, insurance companies often manage liquidity carefully to survive disasters — remember Hurricane Andrew, when 11 insurance companies fell into insolvency after an overwhelming surge of claims.
Actuarial Risks
Insurance actuaries analyze data to determine insurance risks and premiums — a critical function for any insurer. Unfortunately, actuaries have become prime targets for cyberattacks.
Since actuaries manage large volumes of sensitive personal information, a breach could not only harm the actuaries themselves but could also put thousands of clients at risk of extortion and fraud.
With the increasing digitization of the insurance industry, these risks are becoming more pronounced. Worse, cybercriminals now have unprecedented access to sophisticated hacking tools. Activists, disgruntled employees, and even competitors can easily hire hackers on dark web marketplaces to launch attacks against specific insurance companies.
Reputation Risks
Reputation risks go hand in hand with actuarial risks.
Insurance companies depend heavily on trust. Clients entrust insurers with some of their most personal information, expecting it to remain protected. If an insurance company suffers a data breach, clients will likely lose trust, regardless of whether the company was technically "at fault."
In 2025’s hyper-connected world, dissatisfied customers can easily voice their frustrations online. With 79% of shoppers trusting online reviews as much as personal recommendations, a single incident can spiral into a public relations disaster.
Worse, if the breach is severe enough, it could even become a headline news story. Once your company is known as "the insurer that leaked personal data," the damage to your reputation can be difficult — if not impossible — to repair.
Business Risks
Businesses are made of people — and people are vulnerable to cyberattacks.
While major breaches grab headlines, smaller incidents like employees being locked out of their personal or work devices can still disrupt operations significantly. If several top executives lose access to critical systems for days or even weeks, the impact on business performance can be substantial.
Strategic Risks
Strategic risks refer to threats against critical business advantages such as customer service excellence, proprietary data, and trade secrets.
Because cybercrime targets information, it poses a severe strategic risk. A hacker who gains access to your trade secrets could easily leak them, eroding your competitive advantage.
Similarly, an attack on your customer service systems could harm client satisfaction and loyalty — leading customers to abandon your company in favor of better-protected competitors.
Underwriting Insurance Risks
Underwriters take on the financial risks associated with insurance coverage. Underwriting risk occurs when assessments are inaccurate — a risk heightened by cyberattacks.
When cybercriminals disrupt access to critical data, they make it easier for mistakes to happen during the underwriting process. Poor underwriting practices can ultimately lead to insurers paying out more than they collect in premiums — a devastating blow to profitability and long-term survival.
Data Breaches in the Insurance Sector
Insurance data breaches are rising at an alarming rate.
One recent breach exposed the personal information of over 500,000 individuals. In today’s digital world, getting a quick insurance quote is easier than ever — but maintaining privacy has become a growing challenge.
Cybercriminals frequently exchange information, tactics, and targets, often focusing on industries with perceived vulnerabilities. Insurance companies are increasingly attractive targets — and with few culprits caught, more attacks are almost certainly on the horizon.
For an industry already grappling with public skepticism after the economic hardships of COVID-19, the surge in cyberattacks only compounds the problem. In an era when platforms like GoFundMe and Kickstarter allow people to crowdfund their expenses, many are questioning the traditional value of insurance altogether.
The insurance industry must adapt to the digital world — or risk becoming obsolete.
How Do Insurance Companies Avoid Cyber Attacks?
The insurance industry can survive and thrive by blending smart policies with cutting-edge technology. Here are some essential steps insurers can take to avoid cyber threats.
Education
Despite evolving tactics, many cyberattacks still rely on basic strategies like phishing.
Phishing occurs when a hacker impersonates a legitimate business to trick victims into clicking malicious links or sharing sensitive information.
Employee education is the first line of defense. Companies must train employees to:
- Never click suspicious links.
- Never share personal information through unsolicited emails.
- Verify the authenticity of communications before taking action.
Well-informed employees can stop many cyberattacks before they start.
Hiring an IT Company
Insurance companies would do well to partner with cybersecurity experts.
Leading IT security firms deploy sophisticated systems capable of identifying vulnerabilities in real-time and blocking attacks before they cause damage. By constantly updating defenses and monitoring for threats, cybersecurity firms help insurers stay a step ahead of cybercriminals.
The fewer entry points hackers have, the safer the company will be.
FAQs About Cybersecurity and Insurance
As the insurance industry continues to adapt to the digital age, cybersecurity has become a top priority. Many insurance companies are now facing increased risks from cyberattacks, ranging from data breaches to ransomware. In this section, we’ve addressed some of the most common questions about the cybersecurity challenges insurers face and how they can mitigate these risks in 2025.
Cybersecurity threats are reshaping the insurance industry in 2025 by increasing operational risks, impacting customer trust, and driving the demand for cyber insurance policies. Insurers must now invest heavily in cybersecurity measures to protect sensitive customer data and maintain business continuity.
Insurance companies are prime targets because they hold vast amounts of personal, financial, and health data. This information is highly valuable on the dark web, making insurers an attractive focus for cybercriminals seeking identity theft, fraud opportunities, and extortion payouts.
The most common cyberattacks on insurance companies include ransomware attacks, phishing scams, data breaches, and distributed denial-of-service (DDoS) attacks. These attacks can compromise client data, disrupt business operations, and cause significant financial and reputational damage.
Insurance companies can improve cybersecurity by investing in advanced threat detection technologies, training employees to recognize phishing and social engineering attacks, partnering with cybersecurity experts, conducting regular system audits, and developing a robust incident response plan.
Prevent Threats to Yourself, and Your Business
Now that you understand the cybersecurity impact on the insurance industry in 2025, you might feel a little concerned — and rightly so. With breaches exposing hundreds of thousands of personal records, vigilance has never been more important.
Fortunately, you have options. At Insurdinary, we work hard to connect you with Canada's most secure insurance providers — companies that take cybersecurity seriously and protect your data at every step.Ready to find safer, smarter insurance solutions? Get a quote with Insurdinary today.
