The rise in digitalization is increasing the number of cyberattacks and legislation to prevent cyber-attacks is leading to the market growth of cybersecurity. The primary factor that is driving the cyber insurance market is the rise in the cybercrimes and wide adoption of the cloud by various end-users across the globe. Consumers are widely adopting cyber insurance policies with the purpose of mitigating the risk which is acting as the key factor of the market growth of the cyber insurance market. Cyber insurance is designed with the purpose to aid the organization to prevent cyber-related security breaches or similar cyber-attacks. It offers coverage related to the first parties and the claims by third parties to mitigate the risk exposure by offsetting the cost involved with the recovery of the internet-based cyber loss. Cyber loss includes loss from network security breaches, indemnification from the lawsuits related to data breaches and others, and loss of privacy among other types of loss. Cyber insurance providers are investing the premium with the purpose to build the portfolio of the financial assets that will be used for future claims. The end-users of cyber insurance include BFSI, Healthcare, Telecommunications, Healthcare, Retail, and Others. The global cyber insurance market is estimated at US$6.848 billion for the year 2019
Data Breach Is Driving the Market
The adoption of the data-driven operations by the end-users is exposing the consumers towards risks of cyber threats. In 2019, the data breach accounted for the largest market size and have risen in recent years due to heavy dependence on cloud computing, workforce mobility and digital data. In India, according to Data Security Council of India (DSCI), the average cost of a data breach rose by 7.9 percent to Rs.12 crore. Sensitive data of the organization and the consumers are stored on the enterprise databases, cloud servers which expose them to data breaches. Thus, these factors are contributing to the adoption of the cyber insurance and are leading to the market growth of the cyber insurance market. Cyber insurance is specifically designed for the organization unlike other insurance with the purpose to protect them from potential and devasting consequence of the cybercrimes such as ransomware, malware, DDoS attacks.
Based on Enterprise Size, the market is segmented into Large Enterprises and Small & Medium-Sized Enterprises. The rise in the number of small and medium level of enterprises (SME) along with the emerging implementation of cloud computing in the enterprise. According to the World Bank, the majority of the formal jobs are generated by the short and medium level of enterprises in the developing economies, in emerging economies formal small and medium enterprises has generated up to 40% of national income (GDP) and 60% of total employment. SMEs are widely using advanced clouds services to access computing resources hosted by the third parties on the internet due to the high cost which are related to the developing or increasing their own IT infrastructure that includes hardware and the developing and sustaining software applications and databases. These factors are expected to significantly contribute towards the growing risk of the cyberattacks that are anticipated to increase the demand for cyber-attack products thus boosting the cyber insurance market during the forecasted period.
The cyber insurance market is segmented on the basis of region as North America, South America, Europe, Asia Pacific, and Middle East & Africa. North America holds the largest share of the cyber insurance market and is leading the market globally. This is due to the presence of the service providers such as Chubb Group Holdings, American International Group Inc, and Lockton Incorporated. The increased focus on the legal framework on the cybersecurity and the development of related policies of the government is aiding the cyber insurance market to advance in the North America region. While, Asia Pacific region is anticipated to be the fastest-growing cyber insurance market in the forecasted period. According to Data Security Council of India (DSCI), Cyber insurance market in India is gradually gaining traction in India as the corporate is increasingly identifying cyber-theft as the one of the most prominent threat to their operations. DSCI data showed that 350 cyber insurance policies were demanded by the Indian corporates in 2018, while in 2017 only 250 were bought which shows 40% increase in the sale. However, developing countries such as China and India are facing cybersecurity challenges.
During the outbreak of Covid-19 pandemic, various government and regulatory authorities has mandated the public and private organization to embrace new ways for working remotely to maintain social distancing. For instance, the Californian Assembly in February 2020 introduced a bill to make the cyber insurance mandatory to process the regulated and protected personal information for all state contractors. The rising trend of Bring Your Own Device (BYOD), Work from Home (WFH) and internet penetration across the globe is leading to the increasing use of digital technologies and cyber insurance has become an absolute necessity measure for protection against the aftermath of cyber-attack. Thus, the cyber insurance solutions allow the organizations to ensure the continuity of business and to maintain the security postures from the threat of the cybercrimes and threats.