Embroker, the digital platform making it radically simple to get business insurance, today released insights on tech companies’ approach to their financial and risk management in 2024. Embroker’s 2024 Business Insurance Index: Tech Sector analyzes tech customers’ actual purchase and decision-making behavior for premiums, limits, retention and more.
It uncovers how businesses of varying size and scale adjusted their insurance strategies year-over-year (YoY) to manage emerging risks such as AI, regulatory shifts and increasingly sophisticated cyber threats, while maximizing their coverage efficiency given an uncertain economy.
Despite these ongoing concerns, increased competition among insurers and ample reinsurance capacity helped keep premiums down, allowing businesses to secure lower-cost coverage in 2024. Average Errors & Omissions (E&O)/Cyber premiums decreased four percent from 2023 to
2024 (compared to a 12% uptick from 2022 to 2023), while Directors & Officers (D&O) premiums remained flat, going up less than one percent YoY for the second year in a row. Employee Practices Liability Insurance (EPLI) premiums saw the highest average premium change, with an 11% uptick in 2024, largely on-trend with the 10% premium increase from 2022 to 2023.
In response to the softer-than-expected market, some expanded their coverage, particularly in E&O/Cyber and D&O policies. Other tech businesses were more cautious, adjusting their insurance budgets to fortify key protections while scaling back in lower-risk areas. New
compliance laws like AI investment restrictions for tech firms with Chinese ties helped keep EPLI top-of-mind as well.
“There is more to the current soft market than meets the eye as it does not reflect a reduction in overall risk for the tech sector. In addition to increased competition and reinsurance capacity, tech businesses appeared more informed and filed fewer claims – all of which helped keep
premiums more favourable in 2024,” said Andy Lea, Chief Insurance Officer, Embroker. “However, with the evolving landscape of cyber threats and potentially significant shifts in regulatory policy, we could see the market tighten in short order.”
Compared to prior years, the largest tech companies (those with $5M+ in revenue; $25M+ in funding; or 30+ employees) increasingly pursued $1M limit policies – the lowest policy option available. This trend toward lower limits – which is the maximum amount of money an insurer
will pay toward a covered claim – suggests a growing willingness of more mature companies to expose themselves to higher claims in exchange for lower premiums.
However, smaller tech companies managed their limits quite differently, particularly in their E&O/Cyber investments. In 2024, 1 in 5 with under $1M in revenue – the lowest revenue category – chose the highest E&O/Cyber limit of $5M, twice as many as in 2022. This speaks to a heightened sense of vulnerability for the smallest in size, potentially connected to mounting AI uncertainties and more limited budgets and resources for in-house cybersecurity tools. The uptick also reinforces Embroker’s 2024 Cyber Risk Index: Startup Edition finding that the rate of cyber incidents experienced by startups increased in 2024.
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