Cyber Insurance Market Size, Share & COVID-19 Impact Analysis, By Insurance Type (Standalone and Tailored), By Coverage Type (First-party and Liability Coverage), By Enterprise Size (SMEs and Large Enterprise), By End-user (Healthcare, Retail, BFSI, IT & Telecom, Manufacturing, and Others), and Regional Forecast, 2023-2030

The global cyber insurance market size was valued at USD 13.33 billion in 2022. The market is projected to grow from USD 16.66 billion in 2023 to USD 84.62 billion by 2030, exhibiting a CAGR of 26.1% during the forecast period.

The growing usage of cyber insurance solutions helps businesses to reduce the risk of cyber threats such as data breaches and cyberattacks. It protects organizations from the costs of Internet-based attacks that affect information governance, IT infrastructure, and information policies. This attack is often not covered by traditional insurance products or commercial liability policies. The growing cybersecurity risks and data breach activities enable businesses to implement cyber insurance policies. Nowadays, small and medium enterprises are also being targeted by cyber attackers. This factor is projected to boost the adoption of fuels new cyber insurance products by small businesses.

COVID-19 IMPACT

Insurance Demand Surged Due to Remote Working amid COVID-19

The pandemic accelerated the digitalization of business operations and has obligated individuals and businesses to embrace remote working. With employees working from home, enterprise Virtual Private Network (VPN) servers have become necessary for organizations. Owing to this, cybercriminals across the globe saw opportunities to capitalize on the crisis. The pandemic period recorded a rise in mail spam, ransomware attacks, and phishing attacks as hackers are using this crisis as bait to imitate brands, thereby misleading employees.

According to the Nuspire threat report, there were 26,156,165 exploitation events, 1,597,858 malware events, and 1,620,910 Botnets events during the pandemic situation.

Large and small enterprises use insurance policies to get full cyber coverage in the event of an attack or breach. Mostly cyber insurance policies include a wide range of coverage relevant to the current environment. This coverage protects the company's network security and privacy responsibilities. It covers security responses, data recovery, ransom demands, reputational damage, system failures, and other types of damages that may cause business disruption.

As per the Swiss Re report, the insurance industry boomed between 2016 and 2019 owing to rising premiums. The pre-COVID-19 demand was mainly due to a shift in the business models executed by SMEs, which focused on improving their e-commerce and digital capabilities. Thus, the rising adoption of public cloud among companies, evolving workspace model, rising cybersecurity threats, and demand for technological advancements have positively influenced the cyber insurance market growth during the pandemic.

LATEST TRENDS

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Market Expansion to be Impelled by Rising Adoption of Crypto Insurance Services

Crypto ownership across the globe has been growing daily. With increasing crypto ownership, crypto threats are rising at an accelerated pace. Highly unstable cryptocurrency serves as the target of multimillion-dollar hacks, leading to investors losing millions and the sector shedding billions. For instance, in March 2022, hackers stole cryptocurrency worth almost USD 540 million from the blockchain project Ronin. This was recorded to be one of the largest cryptocurrency heists on record.

In order to tackle these crypto-threats, companies have been investing in insurance policies to help them from countering these threat risks. Furthermore, a survey from Goldman Sachs showcases that 11% of U.S. insurance companies have either shown an interest in a current investment or are planning to invest in cryptocurrencies. Insurers estimate to broaden and strengthen their return on this investment in the coming years.

Thus, the rising amount of crypto threats and insurance companies investing in crypto insurance are expected to influence market growth positively over the forecast period.

DRIVING FACTORS

Increasing Cyberattacks and Data Breaches among Enterprises to Drive Market Growth

Cyberattacks and data breaches are increasing worldwide among all sizes of enterprises. According to Forbes, the percentage of ransomware attacks that hit organizations jumped to 66% in 2021 with a 29% year-over-year growth. These rising cyberattacks impacted the organizations’ operating ability, which is expected to boost market growth.

Industries, including BFSI, healthcare, education, and retail are being vastly targeted by hackers and threat actors owing to the large volume of stored customer data. Also, growing digitalization, internet banking, mobile banking, online shopping, digital payment, and electronic medical records lead to risks of data breaches in these industries.

Cyber insurance offers company’s comprehensive coverage and helps minimize the post-cyberattack impact. Thus, increasing cybercrime surges the demand for various policies.

RESTRAINING FACTORS

High Premium Cost to Hamper Market Growth

Cyber insurance benefits many industries with protection against cybercrimes and threats resulting in increasing demand for insurance policies. However, the market faces challenges with the high premium insurance policy cost. The hike in the price of policies by the insurance companies is hampering the continuation and its renewal. Premium rates are elevating by 30%, and companies, including American International Group Inc., are reducing coverage limits as the costs soar.

Small & Medium Enterprises (SMEs) with limited funds hesitate to invest in security insurance further. Thus, high cost is expected to hinder market growth.

SEGMENTATION

By Insurance Type Analysis

Maximum Coverage through Standalone Insurance Type to Boost Market Growth

Based on insurance type, the market is categorized into standalone and tailored.

Standalone is likely to gain maximum segment share owing to its comprehensive cover policy. A standalone type of insurance protects an organization from lawsuits filed for breaches of security or privacy that allege a failure to protect sensitive information. Moreover, standalone policies cover a range of assets risk, including business interruption, data loss/destruction, and funds transfer loss.

The tailored segment is anticipated to grow with the highest CAGR during the forecast period owing to the availability of various customized solutions. Tailored insurance is gaining popularity due to its coverage of possible industry risks among sectors such as BFSI, healthcare, IT, and telecom. 

By Coverage Type Analysis

Increasing Cyber Crime to Surge First-party Coverage Demand

Based on coverage type, the market is categorized into first-party and liability coverage.

First-party insurance covers cases where victims are directly involved in the incident. It provides financial assistance to businesses in mitigating the effect of data breaches and cyberattacks. The increasing online theft, hacking activities, extortion, and data destruction are likely to fuel the first-party segment.

The liability/third-party coverage segment is expected to increase during the forecast period. Liability insurance is in high demand as it has become an integral part of risk management programs. Liability coverage is tailored to businesses' specific needs, with benefits such as business interruption loss coverage, data breach coverage, forensic assistance in defending against cyber extortion, and coverage beyond typical liability policies.

Thus, firms dealing with clients' confidential data are significantly adopting third-party coverages.

By Enterprise Size Analysis

Growing Cyber Vulnerability to Upsurge SMEs Insurance Investment

The market is segmented into Small & Medium Enterprises (SMEs) and large enterprises based on enterprise size.

Large enterprises are likely to lead the segment owing to voluminous data generation. This increases cybercrimes and massive data breach incidents. Large enterprises invest extensively in risk management solutions to ensure safe client and company data.

However, SMEs are expected to witness significant growth during the forecast period. SMEs are the new target of hackers. Therefore, small businesses are keen on investing in cybersecurity insurance solutions. For instance,

By End-user Analysis

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Mandate Protection of Vital Customer Data to Surge Insurance Demand in BFSI Sector

Based on end-user, the market is categorized into healthcare, retail, BFSI, IT & telecom, manufacturing, and others.

BFSI is likely to hold the largest share during the forecast period. Consumers' inclination toward digitalization, mobile applications, and internet banking is anticipated to increase cyber risks. Due to vast data generation in the financial sector, it forms an easy target for hackers. This is likely to surge the demand for cybersecurity insurance in BFSI, propelling segmental growth.

However, the healthcare industry is projected to grow with the highest CAGR during the forecast period. The adoption of insurance policies in the healthcare industry is on the rise due to increase in data breaches in the healthcare industry. The healthcare industry reported around 4,419 data breaches involving more than 500 records between 2009 and 2021.

REGIONAL INSIGHTS

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Geographically, the market is divided into five key regions, North America, South America, Europe, the Middle East & Africa, and Asia Pacific. They are further categorized into countries.

North America is expected to dominate the market during the forecast period. The regional growth is driven by increasing cyberattacks and high risk of data loss. The U.S. market holds the maximum share in the region owing to the country's strong government regulation and strict policy in ensuring cybersecurity. Also, the growth is due to the presence of dominant solutions providers.

Asia Pacific is expected to witness significant growth during the forecast period owing to increasing ransom attacks and risks in the region. In 2021, countries with the highest increases in cyberattacks in the Asia Pacific region are Japan, Singapore, Indonesia, and Malaysia, with increases of 40%, 30%, 25% and 22% respectively. Moreover, governments, including Japan, India, South Korea, and China are investing in insurance to lessen the impact of cybercrimes.

As per a report by Cyber Risk Management, insurance demand in the Asia Pacific for cybersecurity increased by 87%.

Cyber insurance solution is gaining traction in the Asia Pacific region due to rapidly growing connectivity. The accelerating digital transformation exposes the organization and makes it vulnerable to cyber exploitation.

Europe is poised to gain a prominent market share during the forecast period. The regional growth is attributed to the changing insurance regulatory rules that increase the demand for these insurance services. According to research by Wavestone, Marsh, and law firm CMS, insurance claims are rising than the number of policies across Europe, as digitalization among organizations remains vulnerable to malicious cyberattacks.

South America is likely to gain steady growth during the forecast period. The demand for cyber policies is increasing in South America as the region witnessed an upsurge in Distributed Denial of Services (DDoS) attacks under one gigabyte per second (Gbps). This creates opportunities for insurance providers to expand their regional product offerings and customer base.

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Similarly, the Middle East & Africa region is likely to showcase significant growth during the forecast period. Nations such as Qatar, Oman, the UAE, Bahrain, and others, are powerfully moving toward digitization in the security and observation area, which is projected to propel the market growth.

KEY INDUSTRY PLAYERS

Strategic Collaborations and Partnerships to Boost Market Footprint of Key Players

Key players are trying to expand their operations and increase their global presence through partnerships and collaborations. This enables players to develop their cyber security offerings and customer base. For instance,

April 2022: Beazley Group and Cytora partnered to streamline insurance for clients and brokers, accelerate profitable growth, and automate risk processing. By implementing the Cytora platform, Beazley modernizes global underwriting operations, improves straight-through processing, and reduces manual processes.

July 2022: Spring Insure launched a commercial cyber offering personalized for small and medium-sized enterprises (SMEs). This cyber offering delivers protection against loss from a cyber-attack and provides access to Beazley Cyber services, including risk management and pre-breach services.

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.


• July 2022: SBI General introduced SBI General Cyber VaultEdge insurance plan, an insurance cover that provides protection against financial losses that occurs due to cyber risks and attacks.


• October 2022: AXA XL launched an incident response team in the Americas. The Cyber Incident Response team determines commitment to the clients and helps them before, during, and after a cyber-incident.


• July 2022: AXA XL announced cyber insurance roles and regional management appointments in the U.S. These roles help to focus on the company's growth strategy and discover innovative methods to address complicated cyber & technology risks.

REPORT COVERAGE

An Infographic Representation of Cyber Insurance Market

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The research report highlights leading regions across the world to offer a better understanding of the significant trends in the market. Furthermore, the report provides insights into the latest industry and cyber insurance market trends and analyzes technologies deployed at a rapid pace at the global level. It further highlights some growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the market.

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