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Cyber Insurance Market Size, Share & COVID-19 Impact Analysis, By Component (Solution and Services), 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, 2022-2029

Region : Global | Format: PDF | Report ID: FBI106287

 

KEY MARKET INSIGHTS

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The global cyber insurance market size was valued at USD 10.33 billion in 2021. The market is projected to grow from USD 12.83 billion in 2022 to USD 63.62 billion by 2029, exhibiting a CAGR of 25.7% during the forecast period. Based on our analysis, the global market exhibited an average growth of 22.4% in 2020 as compared to 2019. 


Cyber insurance solutions enable organizations to mitigate the risk of cyber threat activity such as data breaches and cyberattacks. It protects businesses from the cost of internet-based attacks affecting information governance, IT infrastructure, and information policy, which often are not covered by traditional insurance products and commercial liability policies. The increasing data breaches and cybersecurity risks drive businesses to implement cyber insurance policies. Also, many countries impose fines and mandate governing terms and conditions on companies for any data breach. Small and medium enterprises are also being targeted for cyberattacks. This fuels the demand for new insurance products for 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 in 2020.


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 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 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 Checkpoint, ransomware attacks in 2020 have risen by 93%, and most companies were affected by the attack. These rising cyberattacks are expected to boost the market growth.


Industries, including BFSI, healthcare, 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. For instance,



  • According to HIPAA Journal, around 29.1% of monthly data breaches were recorded in 2020. Companies across industries are steadily investing in insuring the data to measure and secure the loss. Cyber insurance offers companies a 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 Component Analysis


Higher Capability to Measure Cyber Risk to Drive Insurance Solutions Demand


Based on component, the market is segmented into solution and services.


The solution segment holds the maximum market share and is set to continue its dominance during the forecast period. Some of the vital insurance solution providers in the market are Berkshire Hathaway Specialty Insurance, Axis Cyber Insurance, AXA XL Cyber Liability Insurance, and more. Lack of privacy, side effects of the global pandemic, and sophistication of exploits have led to a significant increase in data breaches. As a result, corporate cybersecurity measures are inadequate and vulnerable to data loss. To combat this malicious intent, businesses rely on such insurance solutions.


Cyber insurance solutions are expected to record high popularity among companies with increased capabilities for measuring cyber risks.


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.


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 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 enterprise 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,



  • In November 2020, Aon launched digital insurance for SMEs to help manage insurance coverage through the platform. Cyber insurance premiums have increased the most in SMEs, resulting in 80% segmental growth.


By End-user Analysis


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


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


North America Cyber Insurance Market Size, 2021 (USD Billion)

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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. According to Microsoft research, APAC is 1.7 times more likely to encounter ransomware attacks than other regions. The region accounts for 7% of the total incidents in 2020, with Revil and Maze being the most abundant ransomware behind more than 50% of all successful attacks. Moreover, governments, including Japan, India, South Korea, and China are investing in insurance to lessen the impact of cyber crimes.


As per the report by Cyber Risk Management, insurance demand in 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.


March 2021: Elpha Secure and AXIS partnered to provide cyber and software protection to small businesses. This partnership helps to improve cyber security and mitigate the risk of common cyber threats.


List of the Key Companies Profiled:



KEY INDUSTRY DEVELOPMENTS:



  • 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 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.

  • September 2021: Zurich Insurance Group joined Toronto-based Insurtech BOXX Insurance. This collaboration provided fully integrated insurance and cyber security solution for SMEs, families, and consumers.

  • September 2021: BlinkSM by Chubb and USAA Insurance Agency collaborated to offer personalized cyber protection to families and USAA members. The standalone insurance policy includes expenditures related to a personal cyber event, including fraudulent wire transfers, identity theft, ransomware extortion, and cyberbullying.

  • March 2021: CNA launched CNA CyberPrep. It is an upbeat program of cyber risk services intended to help organizations take a complete approach to cyber threats and help CNA cyber policyholders identify, mitigate, and respond to threats.


REPORT COVERAGE


An Infographic Representation of Cyber Insurance Market

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The cyber insurance market 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.


REPORT SCOPE & SEGMENTATION






























































  ATTRIBUTE



  DETAILS



Study Period



2018-2029



Base Year



2021



Estimated Year



2022



Forecast Period



2022-2029



Historical Period



2018-2020



Unit



Value (USD Billion)



Segmentation



By Component, Insurance Type, Coverage Type, Enterprise Size, End-user, and Geography



By Component




  • Solution

  • Services



By Insurance Type




  • Standalone

  • Tailored



By Coverage Type




  • First-party

  • Liability Coverage



By Enterprise Size




  • SMEs

  • Large Enterprise



By End-user




  • Healthcare

  • Retail

  • BFSI

  • IT & Telecom

  • Manufacturing

  • Others (Government, Travel & Tourism)



By Region




  • North America (By Component, By Insurance Type, By Coverage Type, By Enterprise Size, By End-user, and By Country)

    • U.S. (End-user)

    • Canada (End-user)

    • Mexico (End-user)





  • South America (By Component, By Insurance Type, By Coverage Type, By Enterprise Size, By End-user, and By Country)

    • Brazil (End-user)

    • Argentina (End-user)

    • Rest of South America





  • Europe (By Component, By Insurance Type, By Coverage Type, By Enterprise Size, By End-user, and By Country)

    • U.K. (End-user)

    • Germany (End-user)

    • France (End-user)

    • Italy (End-user)

    • Spain (End-user)

    • Russia (End-user)

    • Benelux (End-user)

    • Nordics (End-user)

    • Rest of Europe





  • Middle East & Africa (By Component, By Insurance Type, By Coverage Type, By Enterprise Size, By End-user, and By Country)

    • Turkey (End-user)

    • Israel (End-user)

    • GCC (End-user)

    • North Africa (End-user)

    • South Africa (End-user)

    • Rest of the Middle East & Africa





  • Asia Pacific (By Component, By Insurance Type, By Coverage Type, By Enterprise Size, By End-user, and By Country)


    • China (End-user)

    • India (End-user)

    • Japan (End-user)

    • South Korea (End-user)

    • ASEAN (End-user)

    • Oceania (End-user)

    • Rest of Asia Pacific




Frequently Asked Questions

The market is projected to reach USD 63.62 billion by 2029.

In 2021, the market stood at USD 10.33 billion.

The market is projected to grow at a CAGR of 25.7% in the forecast period (2022-2029).

BFSI is likely to hold the maximum segment share during the forecast period.

Increasing cyberattacks and data breaches among enterprises drive market growth.

Travelers Indemnity Company, AXA XL, Chubb, American International Group, Inc., Beazley Group, AXIS Capital Holdings Limited, CNA Financial Corporation, BCS Financial Corporation, The Hanover Insurance, Inc., and Zurich Insurance are the top players in the market.

North America is expected to hold the highest market share.

Asia Pacific is expected to grow with the highest CAGR.

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