Cybercrime is still a serious threat and no longer is considered as a risk covered under traditional network security insurance product. Organizations from all industries need coverage for liability and property exposure which is a result of cyber-attacks. This is an opportunity for insurers and reinsurers to innovate cyber insurance products that manage various degrees of risks and cover cost-associated data breaches, credit monitoring, forensic investigations, reputation management, and business interruption.
Cyber Insurance Market Report, published by Allied Market Research, forecasts that the global market is expected to garner $14 billion by 2022, registering a CAGR of nearly 28% during the period 2016-2022. North America constituted the largest cyber insurance market share in 2015 and it would continue to dominate the market during the forecast period. Growth in the region is supplemented by enforcement of data protection regulations in U.S. Moreover, increase in levels of liability and legislative developments accelerate the market growth.
Increase in awareness about cyber risks from boardroom to data centers owing to the rising number of cyber-attacks in the past 23 years is the prime factor that drives the market. However, complex and changing nature of cyber risks limits cyber insurance market growth. Low market penetration of cyber insurance policies in developing countries offers promising business opportunity for market players.
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The global cyber insurance market is segmented based on industry verticals, company size, and geography. Based on industry verticals, the market is segmented into healthcare, retail, financial services (BFSI), information technology and services, others (utilities, energy, manufacturing, construction, and transportation). BFSI and information technology sector were the early adopters of cyber liability insurance policies to protect their data. Although, as per the study, Healthcare vertical generates around one-third of the premium as these companies possess huge third-party data such as personal details of consumers, employment details and cyber criminals can easily misuse this data to make money. For instance, in U.S., around 78% of hospitals are secured under cyber insurance.
Based on revenue generated by companies, cyber insurance market is categorized as very small-sized (2.5 million to 99 million), small-sized (100 million-299 million), medium-sized (300 million to 1billion), and large companies (1 billion and above). Despite the fact that cyber security and cyber risks are acknowledged as serious threat, several companies do not purchase cyber insurance policies. However, the market has witnessed a change in the scenario. Companies of all sizes tend to purchase cyber insurance policies, owing to legal developments. Large companies contribute significantly, i.e., around 70% of the overall cyber insurance market in 2015, as loss of any kind of data has negative repercussions on their businesses.
North America dominates the cyber insurance market and accounts for around 87% of the overall cyber insurance market in 2015. Mandatory legislation regarding cyber security in several U.S. states has led to higher penetration of cyber liability insurance policies. The U.S. cyber insurance industry has become mature, and growth of the cyber insurance industry is projected to decrease owing to rising adoption of cyber liability insurance policies. Europe has very less penetration of cyber insurance liability policies as compared to that of the U.S. The European council has recently passed regulations regarding data protection and security, which are projected to be brought into effect in 2018. These regulations would oblige companies to purchase cyber insurance policies. Though Asia-Pacific accounts for negligible percentage share, it is expected to grow at a significant CAGR during the forecast period owing to a significant increase in ransomware attacks.
Key Findings of the Cyber Insurance Market:
– North America generated highest revenue in 2015 and will continue to lead the market during the forecast period.
– Europe is projected to grow at the highest rate.
– Large companies contribute significantly in generation of cyber insurance premium.
– Healthcare industry was the major buyer of cyber insurance policies in 2015 and will continue to lead the market during the forecast period.
Key companies profiled in the report are American International Group, Inc. (U.S.), The Chubb Corporation (U.S.), Zurich Insurance Co. Ltd (Switzerland), XL Group Ltd (Republic of Ireland), Berkshire Hathaway (U.S.), Allianz Global Corporate & Specialty (Germany), Munich Re Group (Germany), Lloyds (U.K.), Lockton Companies, Inc. (U.S.), and AON PLC (U.K.).