AI and Shared Tech Increase Cyber Risks for Canadian Businesses

• •Shared technology increases risk of correlated losses across businesses.
• •AI adoption raises concerns about new attack vectors and fraud facilitation.
• •Only 22% of SMEs in Canada have cyber insurance, highlighting a significant protection gap.

Canada's cyber insurance market is stabilizing post-ransomware, but new risks from AI and shared technology are emerging. The Insurance Bureau of Canada (IBC) reports that businesses relying on common cloud providers face correlated losses from disruptions. As AI adoption grows, insurers are concerned about dependencies that could amplify cyber exposure across multiple organizations. Generative AI is noted for facilitating phishing and fraud, while AI security tools can enhance threat detection. The protection gap remains significant, with only 22% of SMEs having cyber insurance. Insurers are now focusing on security practices when pricing coverage, emphasizing the need for multi-factor authentication and incident response plans. The market for cyber liability premiums in Canada has surged from $18 million in 2015 to $550 million in 2023.