Cyber Insurance Market Opportunities, Threats, Trends & 2030 Forecast Analysis by TBRC Report
LONDON, Dec. 4, 2019 /PRNewswire/ -- TheBusinessResearchCompany.com offers its latest market report "Cyber Insurance Market By Technology (AI And ML, Robo Advisors, Blockchain And Big Data), By Insurance (Standalone, Packaged And Personal), By End Use (IT Services, Media), Distribution (Tied Agents And Branches, Direct And Other Channels, Bancassurance), Market Competitors - Global Forecast To 2030" from its database.
The global Cyber Insurance Market (https://www.thebusinessresearchcompany.com/report/cyber-insurance-market) was valued at $8,152.9 million in 2019, and is expected to grow to $17,554.6 million by 2025. This market growth in the forecast period can be attributed to the increasing digitalization of businesses due to the adoption of Cloud, social media and the internet of things (IoT), thus, expanding the threats of cyberattacks, increasing incidences of cybercrimes, and increasing awareness of cyber security. To increase the awareness of cyber threats, in France, for instance, "Action against cyber-crime" (ACYMA) was established to organize awareness and prevention campaigns and create an observatory of digital risks that will support predictive analysis of threats. Many insurance associations globally have also started developing educational materials such as "Making Sense of Cyber Insurance: A Guide for SMEs" in the UK, and "Cybersecurity and identity theft coverage: The state of the industry" in the USA, for businesses to increase the awareness about cyber-attacks and their consequences.
According to a 2016 report by the Council of Insurance Agents and Brokers- a global organization representing leading commercial insurance agencies and brokerage firms- one of the council's members made it mandatory for all brokers of the firm to discuss cyber coverage upon renewal of clients' policies and offer an indication of the premium they may expect. It was also found that 90% of brokers played an important role in clients' understanding of cyber risks. Increasing awareness of cyber threats through government and public bodies' initiatives are expected to positively impact the growth of the cyber insurance market.
Cyber insurance companies are seeing a shift of policy buyers from endorsement to standalone policies. Endorsement policies are attached to property and casualty policies, whereas standalone cyber insurance policies refer to insurance policies covering threats from cybersecurity breach events. Standalone cyber insurance policies typically offer liability coverage for losses related to data breaches. Businesses filing a cyber-incident related insurance claim under standalone policies are able to receive monetary compensation of their legal and investigative fees as well as the cost the loss incurred.
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A global survey was conducted by PartnerRe Ltd, a Bermuda-based reinsurance service provider, in collaboration with Advisen Ltd, a USA-based insurance data and analytics provider, in 2018, among 270 brokers and 70 underwriters, regarding the evolution of cyber insurance and factors impacting the evolution. According to the survey, major reasons for businesses to opt for standalone insurance covers include dedicated limits for cyber coverage (70%), expanded Business Interruption (BI)/ contingent BI (49%), other areas of expanded coverage (46%), search for a higher coverage limit (44%), and better access to pre- and post-breach services (41%).
Other reasons for the shift from cyber endorsement to standalone policies included search for standalone policy from a different carrier (12%), experience of a claim (9%), pressure from management (7%) and others (4%).
Stringent Regulatory Environments
The level of future demand for cyber insurance services will also depend on the frequency of high-profile cyber incidents as well as the evolving legislative and regulatory environment for privacy protections in many countries. Introduction of stringent regulations regarding policy coverage and data protection is expected to support the growth of the cyber insurance market. To eliminate the lack of awareness of the cyber insurance policy coverage, in 2016, the UK's Prudential Regulation Authority launched a Supervisory Statement on cyber insurance underwriting risk that is expected to reduce the level of silent coverage of cyber risks in traditional policies offered by UK insurers. The statement is expected to provide greater clarity on when cyber-attacks are covered in traditional insurance policies. In 2018, the European Union (EU) implemented the General Data Protection Regulation (GDPR), law on data protection and privacy for all individual citizens of the EU and the European Economic Area (EEA), that mandates online businesses to receive a consent from individuals to process their personal data. Since the implementation of the regulation, cyber insurance companies have observed an increased number of claims associated with breach notifications, and the trend is expected to continue.
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Data privacy regulations such as the EU General Data Protection Regulation (GDPR) penalties that can go to a maximum of either EUR 20 million ($22.75 million) or 4% of total worldwide annual turnover (whichever is higher) are encouraging companies (particularly in the professional services sector) to consider cyber insurance. Stringent regulations focusing on disclosing full terms of insurance policies' coverage and protection of personal data of individuals are expected to drive the cyber insurance market.
Growing spending on cybersecurity will also support the market's growth. Global cybersecurity spending is expected to reach $113 billion by 2020.
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