Business insurance 2024 retrospective: Navigating rising tech risks in a soft market

The current soft insurance market for business insurance has created both opportunities and new challenges for tech companies seeking comprehensive protection. With increased competition and more available reinsurance capacity — which allows insurers to handle larger risks or write more policies without exceeding its financial limits — costs to business owners have stayed relatively low. But lower cost doesn’t always mean better coverage — some carriers have introduced exclusions and limitations, making once-reliable policies less effective. 

Embroker’s 2024 Business Insurance Index: Tech Sector (available for download here), was generated based on insurance purchasing data from thousands of Embroker tech customers. The report reveals how businesses of all sizes evolved their insurance strategies in response to 2024’s AI disruption, rising operational costs, and escalating cyber threats. From early-stage companies to high-growth businesses with over $25M in funding or over $5M in revenue, the report captures how tech businesses balanced cost, coverage and risk in 2024, and what they may be walking into as 2025 unfolds.

The double-edged sword of a soft insurance market  

Insurance markets “soften” for a few reasons, but a major factor is insurance companies competing aggressively for business. This competition drives premiums down while opening doors to broader coverage options and more flexible underwriting. Basically, cheaper policies all around. At first glance, this buyer-friendly environment seems like a win for the tech sector — but it comes with some trade-offs. 

In 2024, some major carriers responded to lower premiums by adding exclusions and reducing coverage limits, creating gaps in protection at the same time that risks — from cyber incidents to executive liability — were escalating. Embroker took a slightly different approach from the broader market.  We chose to keep our policies more comprehensive and held our premiums steady (or, in some cases, increased them marginally), specifically to ensure our customers were safeguarded from evolving risks. 

But, the soft market won’t last forever. A combination of cyber liability concerns, executive exposure, employment dispute risks, and increasing claims activity — plus a new administration — could trigger market hardening in 2025. This means higher premiums and stricter underwriting, so businesses should regularly reassess their coverage. 

Where insurance pricing stands today:

• Tech Errors and Omissions (E&O)/Cyber premiums decreased by four percent from 2023 to 2024, compared to a 12% increase from 2022 to 2023
• Directors and Officers (D&O) premiums stayed flat, going up less than one percent year-over-year (YoY) for the second year running
• Employee Practices Liability Insurance (EPLI) premiums saw the biggest increase, jumping 11% in 2024, consistent with the 10% YoY increase in 2023

Coverage priorities — Customers, data and regulations

As AI, data privacy laws, and regulatory scrutiny reshaped tech, companies fine-tuned their coverage. 

• Cybersecurity and AI risks fueled E&O and Cyber insurance demand: Startups growing from $5M-$25M in funding to $25M+ saw a 108% jump in Tech E&O/Cyber premiums as they took on larger customers, more data exposure and increased liability. 
• EPLI remains essential — but coverage limits dropped YoY: With increasing litigation risks, 92% of tech companies opted for the lowest EPLI limit ($1M), up from 89% in 2023. Companies may be reallocating budgets toward more pressing risks like cyber. 
• Regulations added new layers of risk: Biden’s AI investment restrictions forced tech businesses with Chinese funding ties to reassess compliance, while DEI regulations put a spotlight on EPLI coverage. 

Small vs. large(r): A tale of two risk strategies

While 2024 premiums were down YoY, one thing remained consistent — risk evolves as businesses grow. Companies at different stages of growth face different challenges, making risk management critical at every phase.

How growth impacted coverage costs:

• More revenue, more risk. Businesses moving from <$1M to $1M-$5M in revenue saw a 97% surge in E&O/Cyber premiums. More customers, contracts and data = more exposure. 
• More funding, higher executive scrutiny. D&O premiums jumped 116% for companies scaling from $5M-$25M to over $25M in funding. More funding brings higher investor expectations, regulatory oversight and personal liability for leaders. 
• Larger teams, bigger HR risks. Tech companies growing from 10-30 employees to 30+ saw a 106% rise in EPLI premiums. More employees = more vulnerabilities to disputes and lawsuits.

Interestingly, smaller tech firms are upping their cyber coverage, while larger ones are scaling back. 

• 1 in 5 companies with <$1M in revenue chose a $5M E&O/Cyber limit — double the rate from 2022.
• Larger tech companies reduced their cyber insurance limits, relying more on in-house cybersecurity investments. 

At first glance, this makes sense — bigger companies can afford to invest in cybersecurity infrastructure, while the smaller ones need to rely more on insurance as a more prominent safety net.  But as cyber threats grow more sophisticated, mid-sized companies could face the greatest risk — not small enough to be ignored, not big enough to be bulletproof.

Takeaways for tech leaders

The 2024 Business Insurance Index: Tech Sector report makes one thing clear — risk isn’t static. As markets fluctuate, regulations shift, and cyber threats evolve, the tech sector needs to take a proactive, strategic approach to risk management. 

Founders should prioritize the following: 

• Reevaluate coverage before premiums climb and underwriting tightens
• Ensure policies actually cover emerging and evolving risks — watch for new exclusions
• Cyber risk isn’t going away. Don’t assume internal security measures replace the need for insurance

The bottom line? Insurance isn’t just a safety net — it’s a strategic advantage. Companies that optimize coverage now will be better positioned to scale securely and stay competitive. 

Interested in digging deeper? Download Embroker’s full Tech Sector Business Insurance Index HERE.