The US Is The Home Of Cyber Insurance And Still Presents Opportunities For Further Development
3 Dec, 2019
The US was the first home of cyber insurance, and continues to provide the biggest market, with 55.1% of the total share by value housed there in 2018. Historically (2014-2018, annual growth rate), market growth in the US was at 34.15%, which is not surprisingly similar to the global rate. However, moving forward, this growth is expected to slow somewhat with the forecast growth rate to 2022 at 20.75%. The higher global growth is being influenced by much faster growth in markets where cyber insurance is a newer introduction to the economy, and thus these markets are more quickly developing. In India for instance, the forecast annual growth rate to 2022 is 63.75%, and the same in Brazil is 49.93%. These growth rates are highlighting strong and rapidly moving opportunities in these countries, and an opening for players in the market to establish themselves and their business at a crucial point as the market seeks to establish itself.
This does not however mean the US market is without opportunities for success. The US cyber insurance market is the largest in the world and by a good majority, accounting for $3,740 million in 2018. The size of the market is somewhat owing to the size of the economy, however the market was also initiated here and is most developed in the US than anywhere else, therefore there are clear opportunities for both technological streamlining to increase profitability, and further penetration into smaller businesses where the numbers of those with cyber-insurance are much lower. The presence of a well-developed IT industry, high incidences of cyberattacks, high awareness of cyber-related threats, and high spending on cybersecurity in the country are other major factors contributing to market growth.
A majority of the 25 most populous US cities have cyber insurance. The percentage of US companies that purchase cyber insurance varies significantly by industry and company size. Over 75% of financial institutions, retail, healthcare and hospitality companies with revenues over $1 billion purchase cyber insurance. The level of penetration among small and medium businesses is estimated at less than 5%. Large retailers and financial institutions account for nearly half of the US standalone cyber premiums. Healthcare is also a large and growing segment of the market. The cyber insurance market in the USA is relatively concentrated with the top 10 writers holding 71% market share in 2018. The market is attracting new players despite consolidation in the industry. The number of cyber insurers in the US market increased from 170 in 2017 to 184 in 2018. The US companies, American International Group, Inc. and The Travelers Companies, Inc. are among the top five largest players in the global cyber insurance market.