Cyber Insurance

Cyber Insurance

The global cyber insurance market is a growing industry that offers coverage to businesses and people against cyber threats like data theft, cyber threats, and ransomware attacks. This market includes several types of insurance solutions that aim at addressing the financial impact of cyber events, including legal expenses, notifications, and data restoration. The market’s growth is due to the increasing incidences and complexity of cyber threats, the growing concern about cybersecurity threats, and the enhanced legal and compliance standards for data protection across various sectors. With the rapidly changing world and the development of new technologies, companies are starting to understand the need for cyber insurance as a key element of their risk management, thus driving the demand for broad and customizable insurance products in this field.

The cyber insurance market is set to exhibit a growth rate of about 21.7%. This is due to strategic alliances with cloud service providers and other tech firms that can enhance product offerings and market reach. For instance, in November 2022, Agilicus, a cybersecurity firm, and Ridge Canada Cyber Solutions Inc. (RCCS), one of the leading managing general insurance agencies, collaborated to assist Canadian small to midsize businesses (SMBs) in qualifying for and obtaining cybersecurity insurance.

• Based on the organization, the market is bifurcated into SMEs and large enterprises. The SME category is expected to have the largest market share of the cyber insurance market. The SME category is rapidly realizing the disastrous financial and operational consequences of cyber incidents. SMEs are usually not able to effectively protect their data due to the lack of funds to procure cybersecurity measures like large enterprises. With these businesses realizing the need to protect operations from cyber risks, the market for cyber insurance for these businesses is expanding. This has led to Insurers developing new programs that seek to address the emerging market for SMEs where coverage not only extends to defense but also includes risk management services through which SMEs can avoid being victims of cybercrimes hence growing the market for cyber insurance.
• Based on the coverage, the market is segmented into data breach, cyber liability, first-party coverage, third-party coverage, and others. Among these, the data breach category is expected to grow at the fastest CAGR during the forecast period. First-party coverage is central to the understanding of the cyber insurance market as it directly handles the costs that organizations suffer from due to cyber threats. Coverage found in this coverage excludes imminent expenses such as data restoration, business loss, and communicating to the clients that their data has been compromised. As the occurrence of cyber threats increases in both intensity and complexity, a need for first-party coverage has arisen because of the financial consequences of cyber-attacks. First-party coverage also encourages the growth of the market because it offers insurance to organizations as a contingency plan in case, they experience a cyber-attack.
• Based on the verticals, the market is segmented into BFSI, healthcare, IT & telecom, retail, and others. Among these, the IT & telecom category is expected to grow at the fastest CAGR during the forecast period. IT and telecom sectors are crucial for society and thus make excellent targets for hackers, so companies must invest in security and insurance. The risk associated with cyber threats has grown due to the rising complexity of and interdependence between digital networks, and these companies are now looking for a holistic cyber insurance policy that would protect them from loss of operations as well as from legal remedies. The market is advancing as such sectors as IT and telecom demand specific cyber insurance products due to its risks for insurance companies.
• For a better understanding of the market adoption of cyber insurance, the market is analyzed based on its worldwide presence in countries such as North America (U.S., Canada, and the Rest of North America), Europe (Germany, U.K., France, Spain, Italy, Rest of Europe), Asia-Pacific (China, Japan, India, Rest of Asia-Pacific), Rest of World. Among these, North America has been considered to have the largest market share for cyber insurance because the region is technologically advanced with industries that have high digital technology adoption and see high risks from cyber threats. Many of the world’s largest firms are based in the region, particularly the finance, healthcare, and technology industries, all of which are favored targets of cyber criminals. Furthermore, increasing regulatory standards including the General Data Protection Regulation (GDPR) in Europe have continued to compel North American organizations to undertake proper cyber insurance policies that can address their challenges. The awareness of organizations in North America of such risks, the development and complication of cyber threats, as well as the availability of effective risk management mechanisms, have strengthened the leadership of North America in the global Cyber Insurance market.
• Some of the major players operating in the market include Zurich Insurance Company Ltd: Aon plc.; Allianz; Lockton Companies LLP; Chubb; Munich Re Group; Berkshire Hathaway Direct Insurance Company; Lloyd’s; American International Group, Inc.; AXA SA