Cyber Insurance Is A Fast Growing And Developing Market
The cyber insurance market is a relatively new market, which is full of opportunities for companies to grow. Indeed, companies entering the market at this early stage have the unique opportunity to shape the market from conception into development. The global cyber insurance market was valued at around $8,153 million in 2019, having grown at a compound annual growth rate (CAGR) of 37.2% from $1,915 million in 2014. This growth is forecast to continue with a CAGR of 20.2% forecast for the next five years, taking the market to a value of nearly $14,145 million in 2022. The global cyber insurance market is expected to reach about $17,555 million in 2025, growing at a CAGR of 7.5%, and $21,940 million in 2030, growing at a CAGR of 4.6%.
As with any insurance market, the clear driver is the risk factor. Cybercrime and cyber security are becoming increasingly salient issues across industries. A survey was conducted by Allianz SE, a German multinational financial services company, among 2,376 of their international clients. According to the survey, in Europe, in 2018, cyber incidents including cybercrime, IT failure and data breaches were the second highest business risk selected by 32% of respondents. According to the same survey, cyber incidents were considered as the top business risk in 2018 by respondents in Austria (70%), Belgium (43%), the Netherlands (54%) and the UK (60%). The awareness of the potential risk of cybercrime, parred with the vast media attention given to high-profile data breach cases furthers demand for cyber insurance products.
The increased risk associated with cyber-attacks does in turn lead to increased spending on information security, thus furthering the growth of the global cyber insurance market. Information security spending has so far mainly been driven by security risks taken by organizations while storing the data on servers and in the cloud, business needs of organizations to be constantly connected, and industry changes such as the introduction of the General Data Protection Regulation (GDPR) into Europe that required strengthened information security systems in place for organizations storing users’ personal data.
Further opportunities for the cyber insurance market will be derived from internet-based business models. There has been a fundamental shift in how consumers spend, with household name businesses such as eBay, Netflix and Amazon all operating purely online. Forecast increase in customers’ expenditure online will also support the shift. According to eMarketer, a USA-based market research company, the global e-commerce market is expected to grow from $2.4 trillion in 2017 to $6.5 trillion in 2023, at a CAGR of 18.3%. The growing number of internet-based businesses is expected to increase the target pool of cyber-attacks, therefore driving the demand for cyber insurance.