Carriers
Carriers Move to Close AI-Driven Cyber Gap Hitting Small Businesses
By Felipe Bernal, . Insurance Wire.
Small businesses are getting hit harder by AI-assisted cyberattacks, and their insurance coverage often isn't keeping up. That is the central finding from a wave of carrier activity reported by Digital Insurance, which identified Travelers, Beazley and Coalition as among the companies actively reworking their cyber products and outreach in response.
What's driving the surge
The 2026 Travelers Institute Risk Index, cited in the report, finds that AI is creating new opportunities for cyber incidents while many businesses remain underinsured, with smaller companies particularly exposed. The spread of AI-assisted coding tools is a double-edged problem: it lets small shops build software they couldn't otherwise afford to develop, but it also gives fraudsters cheaper, faster ways to exploit them.
One specific category of cyber insurance claims has risen 57%, according to the report, though the publication does not identify which claim type that figure covers. Account takeovers are also named as a growing trend that policies need to address.
What carriers are being asked to do
The challenge for underwriters goes beyond pricing. According to the report, an underwriter needs to understand where the limits of an AI system sit, who owns the outcome when something goes wrong, how quickly a human can step in, and whether a company can reconstruct events after an incident. Those are questions that standard small-business cyber applications were not designed to answer.
AI is also reshaping the distribution side. The report notes that many consumers find AI tools make them more comfortable talking to agents, which could help carriers reach small-business owners who have historically been hard to engage on cyber risk. At the same time, AI coding tools are pressuring insurtechs to rethink their value proposition as the barrier to building software drops.
The regulatory dimension
Even when AI systems perform accurately enough to act without human review, the report flags a harder problem: customers and regulators will challenge the results. Carriers using AI in underwriting or claims decisions need to be able to defend those decisions, which means documentation and explainability are now underwriting requirements, not just compliance preferences.
What to watch
The gap between how fast AI-assisted fraud is evolving and how quickly policy language can be updated is the core risk here. Small businesses typically lack dedicated IT staff and security budgets, which makes them attractive targets and slow to recover when breached. Carriers that can close that gap with clearer coverage terms and proactive outreach stand to capture a market that has historically been underserved on cyber. The harder question is whether policy language can keep pace with attack methods that are themselves being accelerated by the same AI tools carriers are trying to insure against.
Source: https://www.dig-in.com/news/smes-are-easy-targets-for-ai-attacks-how-can-carriers-help
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