Embroker 2024 Tech Business Insurance Index: Rising Risks and Soft Market Impact Priorities for Tech Companies

Annual index reveals shifting risk appetite of tech companies in midst of emerging AI technologies and market uncertainties

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 Sector¹ 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.

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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 favorable 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.

Other key findings include:

• Tech E&O/Cyber Coverage Approached with Growing Nuance: E&O/Cyber coverage increases as companies grow and face more exposure. Companies going from mid-size to large (those that grew from $5M-$25M to over $25M in funding) saw the biggest jump in pricing, with E&O/Cyber premiums surging by 108%. This highlights the increased risk of product defects, project issues and cyber vulnerabilities associated with handling more customers, managing larger data volumes, and facing tighter regulatory scrutiny.
• D&O Costs Spike for Heavily-Funded Tech Companies: The responsibilities and liabilities of founders and leaders grow as their companies expand. D&O premiums went up by 116% for companies increasing funding from $5M-$25M to over $25M. As of 2024, US and EU legislation opened up the possibility of holding executives personally liable for cyber incident losses, which likely contributed to this uptick as well.
• EPLI Premiums Surge for Growing Companies: As companies grow in headcount, their risk of employee claims and lawsuits goes up in tandem. EPLI premiums rose by 106% for companies that grew from 10-30 to over 30 employees, reinforcing how critical protecting against employee claims becomes as a business expands its workforce.

“In 2024, tech companies struck a nuanced balance between profitability and mitigating against an uncertain economy, the AI industry juggernaut, and fast-evolving cyber risks,” said Ben Jennings, CEO of Embroker. “Risk isn’t static, so as companies scale and regulations shift in 2025, they’ll need to proactively adapt their insurance protections to the evolving dynamics of their business, the economy, and more.”

In response to these findings, Embroker recently launched its new Risk Profile for tech companies. Based on just a few questions, the smart tool will instantly assess the specific risk areas a business should consider and recommend coverage options. The personalized risk assessment ensures businesses are only shopping for the protections they need, allowing them to shop quickly and confidently.

"Our new risk profile tool is a clear step forward in helping tech businesses navigate the risks they face and removing the guesswork from an already stressful, tenuous process,” added Jennings.

To learn more about the specific needs and costs of insurance for technology companies in a rapidly changing risk environment, check out the digital report and visit http://www.Embroker.com.

About the Report/Methodology¹:

The new digital report, titled The Embroker 2024 Business Insurance Index: Tech Sector, generated by thousands of Embroker tech customers, documents the corresponding fluctuations in average premiums, limits, and retentions for different lines of business insurance as tech companies grow in revenue, headcount, and funding. It highlights full-year 2024 insurance purchasing data generated by Embroker tech customers, from early-stage pre-revenue companies to companies with over $25M in funding or over $5M in revenue. The report documents the types of coverage founders purchased in 2024, and how much they paid based on their stage. It also includes select year-over-year comparisons with 2023 and 2022 — providing historical context of business insurance trends that speak to broader business and societal shifts.

About Embroker

Embroker is transforming commercial insurance by making it radically simple for businesses to get the right insurance at the best price. Embroker focuses on industry-specific coverage for the most complex and inefficient lines of insurance, such as Directors and Officers, Employment Practices Liability, Cyber, and Professional Liability. Embroker uses predictive modeling powered by proprietary technology to fully automate underwriting and make the buying process simple, fast, and more affordable. Through Embroker Access, Embroker provides partner agencies and wholesalers with the capability to offer all of Embroker’s industry-leading insurance products to their customers. Founded in 2015, Embroker is headquartered in San Francisco and has raised more than $140M in funding from leading Fintech and Insurtech investors.

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