Insuring the Digital Economy 🔐: AI & Quantum Risks, Parametric Policies Take Off ⚡, Robots & SpaceTech Liability 🚀 & more! 🛡️
Insurance 2035: Innovation for a Digitally-Driven Risk Landscape
Welcome to 22nd Century Frontier — your strategic edge in innovation, investment, and entrepreneurship. 🚀
I met with our partners at AltaWorld this week and came away convinced it’s worth revisiting the conversation we started at ITIC-London 2025.
Back in April, I had the honour of moderating the panel Insurance for the Digital Economy - Creating New Products for Emerging Risks alongside Sean Spain and Zainab Ibrahim. That session sparked a huge number of questions — about underwriting AI risk, quantum-era exposures, and how incumbents should adapt product and distribution models for a rapidly digitising economy.
In this piece, I’m resurfacing the best takeaways from the conference and going deeper: fresh analysis on the most urgent risk vectors, practical frameworks for product teams and risk managers, and scenario thinking you can use today to stress-test strategies for the next five years. If you work in insurance, technology, risk, or regulation — this one’s for you.
Key Takeaways
Research suggests the insurance market for digital economy risks could grow significantly by 2035, driven by emerging threats such as agentic AI, robotics, spacetech, and quantum computing.
Cyber insurance will likely remain foundational, evolving to cover AI and quantum-related breaches, with new products emerging for AI liability, blockchain, and robotics risks.
Parametric and usage-based insurance are poised to gain traction, offering flexible coverage triggered by specific events (e.g., cyber incidents) or personalized premiums based on IoT data.
Novel risk categories like space debris and quantum encryption breaches could lead to the development of highly specialized insurance products.
Controversy persists in volatile domains such as cryptocurrency, with insurers wary due to regulatory uncertainty, limited historical data, and growing ethical concerns around AI and robotics liability.
Table of Contents
Overview
Key Insurance Products for Emerging Digital Risks
2.1 Cyber Insurance
2.2 AI Risk Insurance
2.3 Blockchain and Cryptocurrency Insurance
2.4 Parametric Insurance
2.5 Usage-Based Insurance (UBI)
Insurance for Emerging Digital Risks Beyond Cyber and AI
2030–2035: Insuring the Next Frontier of Technology
4.1 Robotics and Humanoid Robots Insurance
4.2 SpaceTech Insurance
4.3 Quantum Computing Risk Management
Challenges and Opportunities in Developing New Insurance Products
Conclusion: Embracing the Future of Risk
1. Overview
The digital economy—defined by economic activity powered by digital technologies and the internet—is giving rise to a wave of emerging risks that traditional insurance models struggle to cover. These include cybersecurity threats, AI-related liabilities, data breaches, robotics malfunctions, blockchain and cryptocurrency risks, as well as hazards from spacetech and quantum computing. In response, the insurance industry is beginning to develop innovative products and risk frameworks tailored to these challenges. This article provides a comprehensive analysis of how insurance is expected to evolve by 2035, drawing on insights from industry reports, expert forecasts, and market trends to inform stakeholders navigating the future of risk in a rapidly digitizing world.
2. Key Insurance Products for Emerging Digital Risks
2.1 Cyber Insurance: A Pillar of Digital Risk Management
Cyber insurance has become a critical product for businesses in the digital economy, covering financial losses resulting from cyber threats such as data breaches, ransomware attacks, and business email compromise. The cost of cybercrime is projected to reach $10.5 trillion annually in 2025, underscoring the need for robust coverage.
Coverage details include:
First-party losses: Costs related to theft of funds, data, or damage to digital assets.
Third-party losses: Liability claims arising from cyber events, such as legal defense costs and compensation for affected parties.
Additional services: Many policies include proactive measures like cybersecurity assessments, incident response support, and access to forensic experts, as highlighted by providers like Chubb and AXIS.
Leading providers like AIG, Chubb, and Munich Re offer comprehensive cyber insurance solutions, often tailored to specific industries such as healthcare, manufacturing, and technology.
2.2 AI Risk Insurance: Addressing Algorithmic and Ethical Risks
As artificial intelligence (AI) becomes more integrated into business operations, new risks such as algorithmic bias, decision-making errors, and liability for AI-driven outcomes are emerging. AI risk insurance is a nascent but growing area, with insurers beginning to develop products to cover these risks. Deloitte projects that by 2032, insurers could write around $4.7 billion in annual global AI insurance premiums, indicating significant growth potential.
Potential coverage includes:
Algorithmic errors: Financial losses or legal liabilities resulting from AI system failures or biased outcomes, as discussed by IBM.
Regulatory compliance: Coverage for fines or penalties related to non-compliance with AI regulations.
Third-party liability: Protection against claims arising from AI decisions that harm individuals or businesses, as mentioned in Oxford University research.
Challenges include the black-box nature of AI systems, making it difficult to assess and price risks accurately. Insurers are exploring ways to incorporate predictive analytics and risk modeling to address this.
2.3 Blockchain and Cryptocurrency Insurance: Securing Digital Assets
The rise of blockchain technology and cryptocurrencies has introduced unique risks, such as theft of digital assets, smart contract failures, and regulatory uncertainties. Insurance products are being developed to mitigate these risks, though adoption is cautious due to market volatility and regulatory challenges.
Coverage types include:
Cryptocurrency theft: Protection for exchanges, custodians, and individuals against losses from hacks or fraud, as offered by Superscript and CoinCover.
Smart contract risks: Coverage for losses due to errors or exploits in blockchain-based smart contracts.
Regulatory risks: Assistance with compliance issues or legal challenges related to blockchain operations.
Examples include Lemonade's use of blockchain for crop insurance in Africa, automating claims based on weather data. However, traditional insurers are hesitant due to the lack of historical data and market volatility.
2.4 Parametric Insurance: A Flexible Solution for Emerging Risks
Parametric insurance is gaining traction as a way to cover emerging risks in the digital economy. Unlike traditional insurance, which pays out based on actual losses, parametric insurance triggers payouts based on predefined parameters or events.
Relevance to digital risks includes:
Cyber events: Payouts triggered by specific cyber incidents, such as a ransomware attack or data breach.
AI risks: Coverage based on metrics like the number of biased decisions made by an AI system.
Blockchain risks: Payouts triggered by events like a smart contract failure or a significant drop in cryptocurrency value.
Advantages include faster and more straightforward administration, making it suitable for risks where traditional loss assessment is challenging.
2.5 Usage-Based Insurance (UBI): Leveraging Digital Data
Keep reading with a 7-day free trial
Subscribe to 22nd Century Frontier® to keep reading this post and get 7 days of free access to the full post archives.