Cyber Insurance Market 2023 – 2030 by Enterprise Size (SMEs and Large Enterprise), by End-user (Healthcare, Retail, BFSI, IT & Telecom, Manufacturing, and Others), Insurance Type (Standalone and Tailored), by Coverage Type (First-party and Liability Coverage), Partner & Customer Ecosystem (Product Services, Proposition & Key Features) Competitive Index & Regional Footprints by MarketDigits
Industry : Information Technology | Pages : 165 Pages | Published On : Jul 2023
The global cyber insurance market was valued at USD 13.33 billion in 2023 and is expected to reach USD 84.62 billion by 2030, growing at a CAGR of 26.1% during the forecast period.
The increasing utilization of cyber insurance solutions assists businesses in mitigating the risks posed by cyber threats like data breaches and cyberattacks. These solutions provide coverage for the financial costs incurred due to internet-based attacks that affect information governance, IT infrastructure, and information policies. Traditional insurance products and commercial liability policies often do not cover such attacks. As cyber risks and data breaches continue to rise, businesses are adopting cyber insurance policies to protect themselves. This trend is also observed among small and medium enterprises, which are increasingly targeted by cyber attackers, leading to a growing demand for cyber insurance products among these businesses.
The COVID-19 pandemic accelerated the digitalization of business operations and forced individuals and organizations to embrace remote working. With employees working from home, the use of enterprise Virtual Private Network (VPN) servers became essential. Cybercriminals seized this opportunity and engaged in activities such as mail spam, ransomware attacks, and phishing attacks, taking advantage of the crisis to deceive employees by impersonating trusted brands.
During the pandemic, there were significant numbers of exploitation events, malware events, and Botnets events recorded, highlighting the increased cyber threats faced by organizations.
Both large and small enterprises are turning to insurance policies to obtain comprehensive coverage in the event of an attack or breach. Cyber insurance policies typically offer a wide range of coverage to address the current environment, protecting the company's network security, privacy responsibilities, and providing coverage for security responses, data recovery, ransom demands, reputational damage, system failures, and other types of damages that can disrupt business operations.
Before the COVID-19 pandemic, the insurance industry experienced growth due to rising premiums. This was primarily driven by the shift in business models among SMEs, focusing on improving e-commerce and digital capabilities. The adoption of public cloud solutions, changing workspace models, increasing cybersecurity threats, and the demand for technological advancements have all positively influenced the growth of the cyber insurance market during the pandemic, as reported by Swiss Re.
The growing adoption of crypto insurance services is expected to drive market expansion.
As crypto ownership increases worldwide, so do the associated threats. Highly volatile cryptocurrencies become targets for multimillion-dollar hacks, resulting in significant financial losses for investors and the sector as a whole. For example, in March 2022, hackers stole nearly USD 540 million worth of cryptocurrency from the Ronin blockchain project, marking one of the largest cryptocurrency heists ever recorded.
To address these crypto threats, companies are investing in insurance policies to mitigate the risks. A survey conducted by Goldman Sachs reveals that 11% of U.S. insurance companies have shown interest in investing or are planning to invest in cryptocurrencies. Insurers anticipate expanding and strengthening their investment returns in the coming years.
Therefore, the increasing number of crypto threats and the involvement of insurance companies in crypto insurance are expected to positively influence market growth during the forecast period.
The growing number of cyberattacks and data breaches among enterprises is a key driver for market growth.
Cyberattacks and data breaches are on the rise globally across organizations of all sizes. Forbes reports that the percentage of ransomware attacks targeting organizations increased to 66% in 2021, with a year-over-year growth of 29%. These cyberattacks have a significant impact on the operational capabilities of organizations, thereby stimulating market growth.
Industries such as BFSI, healthcare, education, and retail are prime targets for hackers and threat actors due to the large volume of customer data they store. Additionally, the increasing digitalization of processes such as internet banking, mobile banking, online shopping, digital payment, and electronic medical records introduces the risk of data breaches in these sectors.
Cyber insurance provides comprehensive coverage to companies and helps minimize the impact after a cyberattack. Consequently, the growing prevalence of cybercrime drives the demand for various insurance policies.
The high cost of premiums hampers market growth.
While cyber insurance offers significant benefits to various industries by providing protection against cybercrimes and threats, the market faces challenges due to the high cost of insurance policies. Insurance companies have raised policy prices, affecting the sustainability and renewal of these policies. Premium rates have increased by 30%, and companies like American International Group Inc. are reducing coverage limits as costs soar.
Small and medium enterprises (SMEs) with limited funds hesitate to invest further in security insurance due to the high costs involved. Consequently, the high cost factor is expected to hinder market growth.
By Insurance Type Analysis
The market is divided into standalone and tailored insurance types.
Standalone insurance is projected to dominate the segment due to its comprehensive coverage policy. It offers protection to organizations against lawsuits related to security or privacy breaches and failures to safeguard sensitive information. Standalone policies also cover various asset risks, including business interruption, data loss/destruction, and funds transfer loss.
The tailored segment is expected to grow at the highest compound annual growth rate (CAGR) during the forecast period, driven by the availability of customized solutions. Tailored insurance is gaining popularity as it addresses industry-specific risks in sectors such as BFSI, healthcare, IT, and telecom.
By Coverage Type Analysis
The market is categorized into first-party and liability coverage types.
First-party insurance provides financial assistance to businesses directly involved in cyber incidents, helping them mitigate the impact of data breaches and cyberattacks. The increasing prevalence of online theft, hacking activities, extortion, and data destruction is expected to drive the demand for first-party coverage.
The liability/third-party coverage segment is anticipated to grow during the forecast period. Liability insurance has become an essential component of risk management programs. It offers tailored coverage, including business interruption loss, data breach assistance, forensic support against cyber extortion, and coverage beyond standard liability policies.
Therefore, businesses that handle confidential client data are increasingly adopting third-party coverage.
By Enterprise Size Analysis
The market is segmented into Small & Medium Enterprises (SMEs) and large enterprises based on enterprise size.
Large enterprises are expected to lead the segment due to their extensive data generation, which increases the risk of cybercrimes and significant data breaches. These enterprises invest heavily in risk management solutions to protect client and company data.
However, SMEs are projected to experience substantial growth during the forecast period. They have become prime targets for hackers, prompting small businesses to invest in cybersecurity insurance solutions to enhance their protection.
By End-user Analysis Increasing Regulations and Data Protection Requirements Drive Insurance Demand in BFSI Sector The market is segmented based on end-users into healthcare, retail, BFSI, IT & telecom, manufacturing, and others. The BFSI sector is expected to hold the largest market share during the forecast period. The growing consumer preference for digitalization, mobile applications, and internet banking increases the vulnerability to cyber risks. With the financial sector generating vast amounts of data, it becomes an attractive target for hackers, leading to increased demand for cybersecurity insurance in the BFSI sector and driving segment growth. Additionally, the healthcare industry is projected to experience the highest compound annual growth rate (CAGR) during the forecast period. The healthcare sector has seen a rise in data breaches, resulting in increased adoption of insurance policies. Between 2009 and 2021, the healthcare industry reported approximately 4,419 data breaches involving more than 500 records.
Geographically, the market is divided into five key regions: North America, South America, Europe, the Middle East & Africa, and Asia Pacific. These regions are further categorized into countries.
North America is expected to dominate the market during the forecast period. The region's growth is driven by the increasing frequency of cyberattacks and the high risk of data loss. The United States holds the largest share in the region, benefiting from strong government regulations and strict cybersecurity policies. The presence of major solution providers also contributes to the market growth.
Asia Pacific is anticipated to witness significant growth during the forecast period, fueled by the rising ransom attacks and cybersecurity risks in the region. In 2021, Japan, Singapore, Indonesia, and Malaysia experienced the highest increases in cyberattacks, with growth rates of 40%, 30%, 25%, and 22% respectively. Furthermore, governments in countries such as Japan, India, South Korea, and China are investing in insurance to mitigate the impact of cybercrimes. According to a report by Cyber Risk Management, the demand for cybersecurity insurance in the Asia Pacific region increased by 87%.
Europe is poised to gain a prominent market share during the forecast period. The region's growth can be attributed to changing insurance regulatory rules that increase the demand for these insurance services. Research conducted by Wavestone, Marsh, and law firm CMS reveals a rise in insurance claims surpassing the number of policies across Europe, as organizations' digitalization efforts remain vulnerable to malicious cyberattacks.
South America is expected to experience steady growth during the forecast period. The demand for cyber policies is increasing in the region, driven by a rise in Distributed Denial of Services (DDoS) attacks below one gigabyte per second (Gbps). This presents opportunities for insurance providers to expand their product offerings and customer base in the region.
Similarly, the Middle East & Africa region is likely to showcase significant growth during the forecast period. Countries such as Qatar, Oman, the UAE, Bahrain, and others are actively moving towards digitization in the security and surveillance sector, which is projected to drive market growth.
List of the Key Companies Profiled:
• Travelers Indemnity Company (U.S.)
• AXA XL (U.S.)
• Chubb (Switzerland)
• American International Group, Inc. (U.S.)
• Beazley Group (U.K.)
• AXIS Capital Holdings Limited (Bermuda)
• CNA Financial Corporation (U.S.)
• BCS Financial Corporation (U.S.)
• The Hanover Insurance, Inc. (U.S.)
• Zurich Insurance (Switzerland)
KEY INDUSTRY DEVELOPMENTS:
• March 2023: Saiber Innovation Technologies entered into a partnership with CYMAR Management Ltd., a cyber-insurance specialist, to fulfill the cyber insurance needs of the maritime and logistics sector in the UAE and help to protect the maritime & logistics sector from cyber-attacks.
• February 2023: Cowbell, a cyber-insurance provider, entered into partnership with Millennial Shift Technologies to deliver Cowbell’s cyber insurance programs named as Cowbell Prime 100 and 250 to access Millennial Shift's e-trading broker platform, mFactor, for better operations.
Table and Figures
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