Cyber risk, an ever-growing concern for the business community, has amounted to a colossal economic loss of over USD 1 trillion (Source: World Economic Forum). Uncertainty from the ever-changing risk environment is a crucial factor propelling the frequency of cyber incidents. For instance, in 2017, major data loss cases were attributed to unauthorized cloud service providers wherein some of the cases were reported in the manufacturing and transportation sector. Thus, the risk of cyber breach predominantly lies in the commercial sector, which fuels the need for cyber insurance to mitigate economic loss. Below figure gives an overview of the economic loss incurred due to cyber attacks in the U.S. in 2017, by state.
Rapid adoption of digital technologies in all commercial sectors such as banking and finance, transportation, healthcare, and others has enabled hackers to focus on various strategies to conduct data breach attacks. Major cases of data leaks through biometrics have been reported in the Middle East and Africa region (Source: Kaspersky Lab). As more biometric systems are being adopted for user identification and authentication in the Middle East, Turkey and Africa regions, the risk of data breach through these technologies remains a major concern, which is fuelling market growth.
The global cyber insurance market size was valued at USD 9.87 Billion in 2021 and is estimated to reach an expected value of USD 64.09 Billion by 2030 at a CAGR of 23.1% over the forecast period (2022-2030).
The global cyber insurance market can be segmented by product, enterprise, and application.
Based on product, the market can be segmented into standalone cyber insurance and packaged cyber insurance. Standalone cyber insurance plays a significant role in offering comprehensive and innovative solutions to address buyers’ changing needs and risks. Increasing customer concerns regarding systemic cyber events where one cyber event triggers multiple claims at national and global levels are favoring the growth of the standalone cyber insurance market.
Based on enterprise, the market can be segmented into small and medium enterprises and large enterprises. Lack of adoption of effective measures in terms of effective technology deployment and adequate insurance policies is a key factor fuelling market growth. World Economic Forum’s global risk report states that cybercrime has become a part of interconnected global risk with attacks being targeted on all businesses. A cybersecurity report from Keeper Security states that hackers have breached over 14 Million out of 28 Million SMEs in 2016. Additionally, 60–70% SMEs are unable to survive a breach and are out of business, owing to the lack of a supplemental support mechanism in place to help them rebuild the company and reinstate operations.
Based on application, the market can be segmented into financial institutions, retail & wholesale, healthcare, business services, manufacturing, technology, and others. The healthcare segment holds a significant share in the global cyber insurance market, owing to the increasing incidents of data breach in the healthcare sector. In 2017, about 477 data breach issues were reported to the U.S. Department of Health and Human Services (HHS), which affected a total of 5.579 Million patient health records (Source: Protenus). Hacking incidents including ransomware/malware seemingly doubled from 2016 to 2017. In 2016, there were 120 hacking incidents, which accounted for 87% of all affected records (23.7 million patient records).
The global cyber insurance market has been studied across North America, Europe, Asia Pacific, and Latin America and the Middle East and Africa (LAMEA).
North America is estimated to hold a prominent share in the global cyber insurance market, owing to the increasing number of cyber-attacks and breaches, coupled with the rise in economic losses. For instance, in 2014, about 783 data breaches were reported with 85.6 million records exposed, while in the first half of 2015, about 400 data breach events were reported. According to McAfee, the annual cost of the global economy from cybercrime is about USD 445 billion within a year. This increase in the number of cyber-attacks is resulting in a colossal economic loss, which in turn has been surging the demand for cyber insurance.
In Europe, business interruption and data restoration are the key areas where maximum coverage is offered. Cyber extortion and legal support coverage are also available but to a lower extent. The emergence of the EU’s General Data Protection Regulation has also increased awareness about cyber risk and its associated economic losses, which would further stimulate market growth. Furthermore, in Europe, standalone cyber insurance witnesses great demand, owing to the difficulty in quantifying cyber coverage as information related to cyber incidents is not collected under the Solvency II reporting requirements.
The rapid adoption of digital technologies in countries such as China and India has led to an increased risk of cyber breaches, resulting in considerable economic losses. For instance, the following figure depicts total consumer loss through cybercrime worldwide in 2017.
The above figure depicts the intensive need for cyber insurance in Asia Pacific, as technology adoption is high across developing countries. For instance, in India, post-demonetization, digital payment technologies gained exponential traction. Thus, adopting cyber insurance would reduce the impact of economic loss, which is propelling market growth in the region.
The implementation of strict government regulations towards ensuring data security and compliance is the key trends fuelling market growth in Latin America. For instance, Brazil published its new General Law on the Protection of Private Data in December 2018, which is slated to come in effect at the beginning of 2020. This law primarily aims to enhance the privacy protection of personal data obtained by companies in the course of their business. In the case of an occurrence of data privacy breach, fines up to 2% of the company’s turnover would be levied by a new public agency.
Growing cyber threats specifically targeting oil and gas companies in the Middle East are resulting in massive losses, which has compelled companies to insure their assets. According to a Siemens Report, in 2018, cybersecurity breaches in the Middle East were widespread and frequently undetected, with 30% of the region’s attacks targeting operational technology (OT).
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