Cyber Insurance – Where is the Industry Heading?
With monumental uptick in digital services and cloud-based technologies, the volume of cybercrimes, such as cyber-attacks and data breaches, has skyrocketed. Software Giant Check Point reports that 2020 witnessed a staggering 93% rise in ransomware attacks, with about 60% of enterprises suffering from these attacks. Cyber-attacks are not only rising at an unprecedented rate but also becoming more aggressive and sophisticated, leading to costly payouts by affected businesses and providers of cyber insurance. Fortune Business Insights™ predicts that the global cyber insurance market size could be worth USD 36.85 billion by 2028, recording a robust 25.3% CAGR from 2021-2028.
BFSI, healthcare, and retail are among the most commonly targeted sectors by cyber criminals due to the extensive amount of customer data stored. With increasing digitalization, online payments, online shopping, and telehealth, the risk of data breaches across these industries is greater than ever. According to reports by HIPPA Journal, more than 29.1% of month-on-month data breaches were witnessed in 2020. Therefore, to secure the losses, enterprises across industries are increasing their investments for insuring their data.
Cyber insurance, which is also commonly called cybersecurity insurance, serves as a tool to mitigate financial losses occurring from cyber-attacks and data breaches. Cyber insurance coverage covers losses associated with:
- Ransomware payments
- Lost income due to business disruption
- Data recovery
- System restoration
- Customer notifications
- Forensic analysis
Intensifying cybersecurity concerns and heightened risk of data breaches, led by the rise in online and digital solutions, will propel the market during the projected duration. American International Group Inc., Berkshire Hathaway, Zurich Insurance Co. Ltd, Munich Re Group, the Chubb Corporation, Axis Capital, Aon Plc., Hiscox Inc., Lockton Companies Inc., and XL Group Ltd. are some of the notable companies in this business.
How are SMEs Creating Promising Opportunities for Cyber Insurance Providers?
Small & Medium Enterprises (SMEs) are emerging as one of the fastest adopters of cyber insurance coverage. Globally, hackers and cybercriminals have been eyeing SMEs to access critical data. Consequently, many SMEs are investing in advanced risk management solutions to ensure data security. To capitalize on this trend, many insurance providers are also introducing new solution aimed at SMEs. Highlighting a recent instance, Aon launched a digital insurance package for SMEs to provide insurance coverage through their digital platform.
On the other hand, large enterprises are likely to dominate the cyber insurance market share, as massive data breaches and cyberattacks become more commonplace. Insurance providers are likely to benefit significantly due to the burgeoning demand among both large enterprises and SMEs.
What is the Future of Cyber Insurance Industry in Healthcare and BFSI Sectors?
Patient data is among the most valuable types of data available across the world. With the rise of digital technologies, such as telemedicine, Electronic Medical Records (EMRs), remote patient monitoring, and others, this data has surged exponentially in the past decade or so. With rising volumes of patient data worldwide, it’s no surprise cyber criminals are targeting the healthcare sector. In the U.S. alone, healthcare data breaches rose by 55.1% in 2020, according to the 2020 Healthcare Breach Report. Moreover, the U.S. FBI’s Cyber Division reports that a stolen healthcare record can be sold at 50 times higher rate. These factors suggest that the rate of cyber insurance adoption across healthcare could rise monumentally in the coming years.
The BFSI sector is creating tremendous demand for these solutions due to rapid digitalization, adoption of mobile application, and the subsequent rise in confidential customer data. Internet banking is expected to create further risk of cyber-attacks. The cyber insurance market will benefit significantly from the global online banking boom.
COVID-19 Impact and the Future of Cyber Insurance Industry
Cyber insurance has been available in one form or the other for a couple of decades. However, surge in data breaches and ransomware attacks during the COVID-19 pandemic increased its demand significantly. Rise in remote work culture and online learning resulted in a worldwide boom in cyber data, creating the need for more advanced and reliable solutions for its protection.
The pandemic saw insurance providers reduce coverage and benefits and raise premium rates. Many market players introduced new, advanced cybersecurity solutions in a bid to meet the rising global demand. Virtual workspaces will continue to be a trend after the pandemic, as more and more individuals and enterprises embrace remote work culture. Therefore, even in the post-COVID-19-world, cyber insurance is anticipated to be a highly sought-after tool among business of all sizes across industries.