Carriers
GlobalData: Cyber insurers must clarify AI coverage to close SME adoption gap
By Felipe Bernal, . Insurance Wire.
The biggest obstacle keeping small and medium-sized businesses from buying cyber insurance is not cost or lack of interest: it is confusion about what the policy covers, particularly as AI tools become a standard part of how those businesses operate. That is the finding flagged by Digital Insurance, citing analysis from the research firm GlobalData.
What the gap actually is
Cyber insurance, which covers businesses against losses from hacking, data breaches and related digital threats, has historically been marketed around technology risk. But as small businesses adopt AI tools for everything from customer service to back-office operations, the risk profile changes, and standard policy language has not kept pace.
GlobalData's position is that rising AI adoption is pushing small businesses toward cyber coverage, but that insurers are failing to meet them there. The adoption gap, the firm argues, is more a result of confusion than of price or disinterest. If a business owner cannot tell from reading a policy whether an AI-related incident is covered, the rational response is to wait.
Why this matters now
The timing is not incidental. Coalition, a cyber insurer, noted in its report on how AI affects cyber risk that while cyber claims are currently stable and there is no elevated threat from agentic AI, that is likely to change. Agentic AI refers to AI systems that take actions autonomously, without a human approving each step, which introduces new categories of error and liability that existing policy language was not written to address.
The practical implication for carriers is straightforward: if AI-driven incidents become more common and policies are silent on whether they are covered, disputes follow. Ambiguity at the claims stage is expensive for everyone, and it is avoidable at the underwriting stage.
What insurers are being asked to do
GlobalData's recommendation is that insurers make AI coverage explicit in policies aimed at small and medium-sized businesses, rather than leaving it to be inferred from broader language. This is less a product redesign than a communication problem: the coverage may already exist in many policies, but if the customer cannot find it, it does not function as a selling point or as a reassurance.
There is a commercial argument here too. Small businesses represent a large and underpenetrated segment of the cyber market. If the barrier is confusion rather than price resistance, clearer policy language is a relatively low-cost way to move the needle on uptake.
What to watch
The harder question the reporting does not fully resolve is whether existing cyber policy structures actually do cover AI-related losses, or whether carriers will need to build new coverage categories. Coalition's observation that elevated AI risk is coming, even if it has not arrived yet, suggests the window for getting policy language right is open now but will not stay open indefinitely.
Brokers working with small business clients should expect questions about AI coverage to increase as those clients become more aware of their own AI exposure. Having a clear answer, grounded in what the policy actually says, will matter more as incidents accumulate.
Source: https://www.dig-in.com/news/globaldata-insurers-should-spell-out-ai-in-sme-cyber-policies
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