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Cyber Insurance Market to Jump in 2021 as Cybercrime Surges

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Cybersecurity

With cybercrime raging out of control, it’s no surprise that businesses are rushing to protect themselves via cyber insurance.

The global cyber insurance market is expected to grow by 21% year over year and reach $9.5 billion in 2021. That’s according to data by Finaria,it.

These insurance products help companies and organizations hedge against the potentially devastating effects of cyberattacks. Those include ransomware, malware, distributed denial-of-service (DDoS) attacks and others used to compromise a network and sensitive data.

If a costly data breach occurs, the company might not have enough resources to resolve these issues and cover the losses. Cyber insurance can provide support to businesses so cyberattacks don`t cripple their business.

The 2019 Hiscox Cyber Readiness Report showed 41% of firms from Europe and the United States already adopted cyber insurance. And another 30% of were planning to adopt cyber insurance in 2020.

The growing number of companies taking precautionary measures against cyberattacks led to strong growth of the entire sector. In 2020, the global cyber insurance market was expected to hit $7.8 billion. That’s according to MarketsandMarkets. Over the next three years, that should jump by 78% to nearly $14 billion.

Statistics show that by 2025, the cyber insurance market is set to exceed $20 billion.

Cyber Insurance Claims

Almost 75% of cyber insurance claims involved an insuring clause related to breach incident response and crisis management. Data privacy breaches represented the second-most common insuring clause, followed by cyber extortion.

The share of loss events caused by malicious data breaches was highest in the insurance sector, at 39%. The retail and wholesale industry had 30% of such losses between 2013 and 2019. IT and telecommunications, manufacturing and health care followed with 24%, 22% and 18%, respectively.

Asia Pacific represents the most-targeted region for malicious data breaches, according to the 2020 Trustwave Global Security Report. In 2019, 37% of all cyberattacks occurred in this region.

North America ranked second with 33% of all cyber incidents last year. EMEA followed with a 25% share.

The Ponemon Institute said the health care industry tops the list of most expensive data breaches with a $7.13 million average data breach cost. That’s 84% more than the global average. This industry also had the highest average time to identify a violation of 329 days.

The energy industry ranked second of the 17 sectors surveyed, with $6.39 million in average cost and 254 days to spot a breach. Financial services, pharmaceutical and technology follow, with $5.85 million, $5.06 million and $5.04 million in average data breach cost, respectively.

Analyzed by geography, the United States leads all countries with an average data breach cost of $8.64 million. That’s a 5.5% increase in a year. Germany leads among European countries with an average data breach cost of $4.45 million in 2020. That’s a 7% year-over-year drop.


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