Source: Marginal REVOLUTION
Nate Witkin's observation exposes a disconnect in risk pricing: insurers are either underestimating AI-driven cyber threats, or they're rationally responding to a market flooded with competing carriers willing to underprice risk. The gap between accelerating threat velocity and declining premiums reflects either massive information asymmetry between insurers and their actual exposures, or a race-to-the-bottom dynamic where new capital chasing cyber insurance business is forcing incumbents to compress margins rather than accurately price emerging risks. Cheap coverage now could vanish quickly once major claims from AI-enabled breaches force repricing.