According to a SkyQuest Technology report, the global cyber insurance market, valued at $12.94 billion in 2022, is poised for exponential growth. Analysts forecast the market to expand from $16.21 billion in 2023 to an astounding $100.62 billion by 2031, driven by a robust compound annual growth rate (CAGR) of 25.70% over the forecast period.
Cyber insurance, designed to protect against cybercrime activities such as data breaches and cyberattacks, is becoming essential for enterprises. With the rise in cyber threats, businesses are increasingly seeking robust protection to prevent damage to their reputation, customer base, and revenue. The right cyber insurance policy allows companies to implement necessary measures and services to counter cyber risks effectively.
A few takeaways:
Technological Advancements Fuel Market Growth
The rapid evolution of technologies like cloud computing and generative AI propels the rise in cyber threats. Industries globally depend on operational technology, the Internet of Things (IoT), information technology, and digital services, each representing a crucial segment of the technological landscape. The increasing sophistication of cybercriminals and heightened geopolitical tensions further complicate the cyber risk landscape, posing significant threats to global democracies and societies.
Policy Revisions to Simplify Cyber Insurance
As the cyber insurance industry matures, regulatory bodies will enforce stricter cyber and insurance risk management rules. Enhanced data collection standards and consistent reporting on cyber risk exposure will become mandatory. This evolving industry will see substantial variations in cyber insurance plans’ features, limits, conditions, and terms. Over the next five years, policy terms will be refined, reducing ambiguities and aiding policyholders in selecting the right coverage.
Emerging Technologies and Media Influence
Businesses adopting novel technologies and extensive media coverage of cyberattacks significantly drive the cyber insurance market. The increased connectivity through IoT raises exposure to cyber threats, and as attack surfaces evolve, so do attackers’ financial incentives. The growing media focus on cyberattacks underscores businesses’ need to mitigate cyber risks through insurance. Consequently, cyber premiums are expected to increase by 20% to 30% annually.
5G Technology’s Dual Impact
The advancement of 5G technology presents both opportunities and challenges for cybersecurity. Enhanced connectivity and speed offer better encryption and security but also open avenues for new threats. Fraudsters can exploit these advancements to perform sophisticated frauds. The expected adoption of Software-Defined Networking in 5G networks could expose them to various attacks. Businesses must implement highly efficient security measures to address these risks.
Recent Industry Developments
June 2023, Chubb launched ‘Cyber Central,’ a groundbreaking quoting platform for brokers and agents specializing in cyber risks. January 2024, The Travelers Companies, Inc. acquired Corvus Insurance Holdings, enhancing its capabilities with deep cyber underwriting and risk management expertise. In May 2024, AXA XL introduced a unique cyber insurance endorsement to help public companies comply with SEC reporting obligations post-cyber incidents. BOXX Insurance partnered with Zurich Insurance Group to launch a hi-tech cyber risk platform providing digital protection for families and individuals.
With cybersecurity’s increasing importance worldwide, businesses and individuals must prioritize safety and readiness within an interconnected and complex digital network. As cyber risks continue to rise globally, coverage will become an indispensable aspect of business strategy in the coming years.
Source: Cyber Insurance Market at a Stunning 25.70% CAGR through 2031 | Skyquest Technology.
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