Technology Insurance Trends for 2024: A Retrospective Look & Expectations

Understanding the Technology Landscape

A majority of today’s successful businesses count on modern approaches like cloud systems, data centers, and the Internet of Things (IoT) to run their operations. This increased reliance on technology has shifted priorities, with the most prized assets now being a mix of digital and physical resources. As a result, cybersecurity, software infrastructure, the Internet, and vital hardware, have become the foundation of tech companies.

Likewise, the rise of emerging technologies like AI, ML, and the blockchain are shaking up how nearly every industry operates, leaning toward more autonomous systems and sophisticated record-keeping — new territory in the legal and regulatory landscapes.

As organizations expand in the virtual world, malicious actors have caught up to speed to target these new assets. Threats have evolved into cutting-edge social engineering attempts, data encryption, record-breaking ransomware (companies paid $459.8 million to cyber criminals in 2024), and massive data breaches.

Measuring Up: Tech Market Review for 2024

It’s safe to say that tech has experienced some of the most turbulent yet exciting couple of years, with a 2024 marked by innovative AI applications, continued cybersecurity fears, and bullish regulatory decisions attempting to rein in these waves of change.

Key Tech Industry Trends

The stepping stone for any company looking to modernize still lies in adopting cloud computing, moving away from in-house storage that can be costly, inefficient, and difficult to maintain and grow. It’s no surprise that this market grew a staggering 23% in 2024 to be worth $84 billion. As more companies jump on the modernization bandwagon, cloud computing is set to continue growing.

Moreover, scalable and managed solutions powered by the cloud are an organization’s next move in their quest to update their operations — the renowned Software-as-a-Service (SaaS) tools. Thanks to them, companies don’t need to rely on their own infrastructure and programs to operate. In fact, SaaS services are helping them become more productive, cut down costs, and focus on delivering outstanding services rather than creating, managing, and upkeep complex programs.

Lastly, AI has become the ultimate resource to help a company reach its highest potential. The industry is expected to reach $1 trillion by 2030, something previously unheard of in any other emerging industry. The technology is enabling automation and higher business intelligence that can supercharge a company’s decision-making and operational efficiency.

Economic Factors Influencing Tech

The state of the tech industry has always been tied to the economy, waning if it does, and prospering when it’s doing well. For the past two years, inflation and high interest rates have cast a shadow on VC investment, negatively impacting industry growth.

Recent inflation caused the price of many goods and services to spike — this inherently made it more difficult to raise capital. It also affected interest rates, which soared in the US, driving investors away from making any deal that could yield poor returns in the near future.

As a result, the IPO market also suffered, down 9% year-over-year. The CEO of Databricks, one of the startups topping the IPO hopefuls list, said going public in 2024 “is dumb.” Instead, the company has waited and continued to raise capital before they’re fully certain it can list a successful exit.

The Evolving Regulatory Landscape

In 2024, regulators did their best to play catchup with the fast-paced technological advancements in every industry — from AI to education, healthcare, and any industry dealing with personal data.

To start, the EU, known for its strict GDPR to maintain personal data safe, passed and approved the AI Act earlier in the year. This is the biggest and most comprehensive regulation on emerging technology thus far, assigning risk categories for AI applications to keep companies in line with their usage of the tech.

While the US has lagged behind in regulating AI in general, the AI Environmental Impacts Act of 2024 was introduced by Senators to pressure companies to develop products in line with health and safety, showing concern for the technology’s lack of sustainability.

Also, the US Department of Education has also taken the AI matter into their own hands, releasing the guide “Designing for Education with Artificial Intelligence” for EdTech developers to establish transparency, provide clear evidence of learning outcomes, and build trust through inclusive and secure designs.

Furthermore, the Food and Drug Administration (FDA) passed the Final Rule on Laboratory-Developed Tests (LDTs) to improve the safety of private lab-tested products and released guidance to enhance cybersecurity in medical devices.

Technology Trends in 2025: A Look Ahead

With the exciting innovations introduced in 2024 (sophisticated genAI, AI agents, edge computing, and advancements in healthtech), 2025 is set to be another packed year in the tech sector. Additionally, with economic stability on the horizon, it’s set to be a time for heightened investment activity and market growth.

Generative AI and LLMs

AI is the gift that keeps on giving, and it won’t stop any time soon. Generative technology will continue to democratize access to AI tools, personalize experiences, and even accelerate scientific discovery.

On the other hand, Large Language Models (LLMs) will continue transforming areas like software development even further.

As these technologies take over, it’s also crucial for founders to assess the risks they bring, especially when it comes to misinformation, deepfakes, and IP theft, ensuring they stay compliant and secure from cyber threats.

AI Governance and Ethics

Adopting AI must also be done responsibly, making sure it’s being implemented ethically. This means keeping training models in check to avoid bias and increase transparency. Regulations will continue to stay on top of AI activities, whether that’s AI washing, discrimination, or job displacement, so it’s paramount to avoid further risks with this technology.

Quantum Computing

Quantum computing is quickly moving from theory to practice — recent tech advancements are enabling it to grow even further in 2025. The technology could deliver immense computational power to many industries, starting with healthcare (drug discovery), materials science (which vastly influences other industries like clean energy), and cryptography.

What’s true is something as advanced as quantum computing could pose new questions in cybersecurity, opening the door to new risks that will necessitate cutting-edge solutions to keep systems secure.

IoT and Edge Computing

IoT has already shown industries like manufacturing the benefits it can yield to gather, display, and analyze data. As industrial processes become more sophisticated, so will this technology and its applications.

Edge computing is an example of IoT’s expansion, allowing for faster information transfer and overall processes. However, these technologies aren’t spared by malicious actors: in 2024, IoT became a hot target in the dark web. For the technology to thrive and succeed in 2025, companies must invest significant efforts to secure it.

Biotechnology and Synthetic Biology

These two fields are revolutionizing sectors like healthcare and agriculture thanks to applying the most advanced science to disease research, gene editing, and species conservationism in general. As more healthtech companies take shape this year, these disciplines will receive more attention to deliver positive outcomes.

Increased attention also means higher scrutiny, which will come from more voices outside regulators. The ethics of synthetic biology are still highly disputed, turning it into a controversial topic when discussing early life and other biological aspects this technology can impact.

What to Expect From Technology Insurance in 2025

Insurance is also doing its best to keep up with technological advancements and their risks, updating its scope to ensure companies stay safe. So, what do tech trends mean for insurance in 2025?

Cyber Insurance Becomes a Necessity

This current modernization stage companies are undergoing by moving to the cloud and adopting SaaS, IoT, AI, and other tech, also makes them more vulnerable to the increasing wave of cyber attacks. As such, the demand for cyber insurance has skyrocketed. Its coverage encompasses data breach response, business interruptions due to ransomware, outages, or other cyber-related incidents, and cyber extortion.

Technology Errors and Omissions (E&O) Insurance

Emerging technologies don’t come out perfect on the first try, and there are bound to be iterations to improve each version of the service or product. E&O can cover companies from liability claims arising from errors, omissions, or negligence. To go a step further, Tech E&O is a more specialized version covering promising tech companies — many of which are set to make waves in 2025.

Addressing the D&O and Cybersecurity Overlap

A recent insurance trend has been an increase in Directors and Officers (D&O) claims after a cyber-related incident. In fact, research has found that companies with cyber events increased their D&O risk from 5% to 68% after a breach. This is because failing to protect systems and their proper operation is often tied to misrepresentations, which inevitably lead to D&O claims.

A notable example of this phenomenon was the virality of Chipotle’s serving sizes on social media, which led journalists to investigate the restaurant chain’s practices, ultimately leading to a security suit. These situations often result in financial threats to companies, even leading to filing for bankruptcy. Because of these new threats, underwriters have begun to examine these organizations’ financial conditions more closely.

Discussing Proactive Risk Mitigation

Additionally, underwriters are increasingly requiring strong cybersecurity measures to safeguard companies’ digital assets. This is where risk management strategies can make an immense difference for companies committed to securing their assets and the well-being of their stakeholders and users.

Despite a slight decrease in ransomware attacks in the first half of 2024, according to insurers, seasonal surges persist, placing significant strain on businesses. Consequently, we anticipate that the innovation economy will adopt a proactive, AI-driven approach to cybersecurity, leveraging real-time risk assessments and expert guidance to effectively manage costs.

Tech insurance can help entrepreneurs with brilliant ideas and startups thrive in an environment that becomes riskier by the minute. As the stakes are high and the markets constantly fluctuate, working with insurers to acquire the most comprehensive coverage for your company is a top priority going into 2025.

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