The cybersecurity insurance market is estimated to be valued at US$ 16.06 Bn in 2024 and is expected to exhibit a CAGR of 20.3% over the forecast period 2024-2031. Furthermore, the market is expected to grow exponentially owing to rapid digitization across various end-use industries and the consequent increase in cyber threats.
Market Dynamics:
The growth of the cybersecurity insurance market is driven by the increased instances of cyberattacks across various organizations and stringent regulatory compliance requirements regarding data privacy and security. As per recent surveys, cybercrimes have increased by over 35% in the 2019-2023. Ransomware attacks and data breaches have severely disrupted business operations of many companies globally. This has propelled organizations to purchase cyber insurance policies for mitigating financial losses arising from cyberattacks. Additionally, stringent privacy laws such as General Data Protection Regulation (GDPR) in Europe mandate companies to ensure utmost security of customer data and demonstrate financial capacity to deal with privacy breaches. Non-compliance can attract heavy penalties. This has further bolstered the demand for cyber insurance policies. Cybersecurity insurers have also started offering new products with expanded coverage and benefits to attract more customers. Although premium rates are rising, organizations understand cyber risks better now and are willing to pay for such insurance. If underwriting standards are improved with more advanced
Market Driver: Massive Rise in Cyber Attacks is Driving Demand for Cybersecurity Insurance Coverage
The frequency and severity of cyberattacks have risen dramatically in recent years. With high-profile data breaches becoming an almost daily occurrence, organizations of all sizes have become aware of how vulnerable they are to cyber criminals. The financial and reputational costs of a breach can be catastrophic for businesses. As a result, there is growing realization that traditional general liability and property insurance policies do not provide adequate protection against cyber risks. This has led to surging demand for standalone cybersecurity insurance policies that offer dedicated coverage for liabilities and expenses arising from security incidents. Insurers have moved to capitalize on this opportunity by expanding their product portfolios to cater to this need.
Market Driver: Growing Regulatory Compliance Requirements are Forcing Organizations to Consider Cyber Risk Transfer Options
Stringent data privacy and security regulations like the EU’s General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) have imposed heavy fines and penalties on companies that suffer data breaches. This has increased pressure on organizations to strengthen their cyber defenses and risk management frameworks. Purchasing cyber insurance has emerged as a prudent strategy to comply with regulatory obligations and offset potential costs of non-compliance. The policies help transfer financial risks to insurers while also providing policyholders with legal and technical expertise to respond effectively in the event of a breach. As regulatory standards continue to tighten globally, compliance-driven demand for cyber insurance will keep rising.
Market Restraint: Uncertainty Around Emerging and Evolving Threat Landscape Restrains Growth Potential
While the imminent cyber risks are clear, the challenges posed by new and advanced threats are unpredictable. Threat actors are constantly developing more sophisticated techniques to compromise networks and systems. This ambiguity makes it difficult for underwriters to accurately model cyber risks and estimate losses. Insurers also struggle with a lack of reliable historical claims data, which impacts proper pricing of policies. Unless the threat landscape becomes less volatile over time, insurers will remain wary about over-committing capacities to this market segment. High costs associated with constant research on evolving threats and maintaining specialized expertise further constrain insurers’ participation.
Market Restraint: Lack of Standardized Policy Terms and Conditions Hinders Wider Adoption
The cybersecurity insurance market is still maturing with no uniformity in policy structures, exclusions and coverage grants across providers. Variations in terms and conditions lead to uncertainty and confusion among buyers. This hampers larger scale procurement of cyber coverages, especially by mid-market companies seeking standard solutions. Efforts towards developing comprehensive and easy-to-understand policy frameworks on industry-wide basis have been slow. Until broader standardization is achieved, many organizations will delay insurance purchases or opt for bare minimum plans due to the complexities involved. This restrains the cyber insurance industry from achieving its full growth potential.
Market Opportunities: Insurtech Innovation Opening New Risk Transfer Models
Insurtech - the fusion of insurance and technology - is transforming the wider insurance landscape including cyber risk insurance. Startups are leveraging technologies like AI, IoT and blockchain to develop innovative underwriting platforms, risk scoring and claims management tools. This allows for more granular risk assessment, cost-effective policies tailored to specific industry sectors and automated processes. Insurers are partnering with insurtech firms to launch new insurance-as-a-service models like pay-as-you-go and usage-based cyber coverages. Such offerings will enhance affordability and accessibility of products. The rise of embedded and on-demand insurance coverage subscriptions is a huge market opportunity.
Market Opportunities: Growth of IoT expanding Attack Surface Brings new Risks to Insure
The proliferation of Internet of Things (IoT) devices across various industries like manufacturing, transportation, healthcare etc. has vastly increased the vulnerability of organizations. These "things" connected to operational networks present a new attack vector for malware and ransomware. Successful cyberattacks on IoT systems could disrupt critical services and pose safety threats. While IoT-driven operational and financial risks are emerging fast, dedicated cyber insurance solutions for IoT security are still inadequate. Insurers have a major market opportunity to tap into this need by designing comprehensive policy frameworks addressing unique IoT cyber exposures. This will be a key future growth driver for the insurance industry.
Link - https://www.coherentmarketinsights.com/market-insight/cyber-security-insurance-market-5068
Key Developments:
- In July 2022, AXA XL announced new cyber insurance roles and regional management appointments in the U.S. These positions will support the company's growth strategy and develop innovative approaches to address complex cyber and technology risks.
- In July 2022, Spring Insure introduced a new commercial cyber insurance tailored for Small and Medium-sized Enterprises (SMEs). This cyber insurance package offers protection against losses from cyber-attacks and grants access to Beazley Cyber services, including risk management and pre-breach services.
- In April 2022, Beazley Group is a specialist insurer with a focus on providing insurance and reinsurance solutions to clients worldwide. and Cytora is a British-based technology company specializing in commercial insurance underwriting and risk assessment teamed up to simplify insurance processes for clients and brokers, speed up profitable growth, and automate risk assessment. By using the Cytora platform, Beazley plans to update its global underwriting operations, enhance automated processing, and cut down on manual tasks.
Key Players:
BitSight, Prevalent, RedSeal, SecurityScorecard, Cyber Indemnity Solutions, Allianz, AIG, Aon, Arthur J. Gallagher & Co, Travelers Insurance, AXA XL, Axis, Chubb, Travelers Indemnity Company, American International Group, Inc., Beazley Group, CNA Financial Corporation, AXIS Capital Holdings Limited, BCS Financial Corporation, Zurich Insurance, and The Hanover Insurance, Inc.
