The cybersecurity insurance market was valued at USD 7.36 billion in 2020 and is expected to reach USD 27.83 billion by 2026, registering a CAGR of 24.30%, over the forecast period (2021-2026). The increasing digitalization adoption, such as the cloud, Big Data, mobile technologies, IoT, and artificial intelligence (AI), in ever more areas of business and society, and the growing connectivity have increased the workload of already strained IT teams.
- Cases of unauthorized stealing or accessing sensitive business data, such as intellectual properties, employees' personal information, or even financial records, have been rising, which, in turn, is driving the cybersecurity insurance market.
- However, cyber Insurance helps in guarding businesses against the potential effects of cyber-attacks. It helps an organization mitigate risk exposure by offsetting costs after a cyber-attack/breach has happened. To simplify, cyber Insurance is designed to cover the fees, expenses and legal costs associated with cyber breaches that occur after an organization has been hacked or from theft or loss of client/employee information
- According to the Center for Strategic and International Studies (CSIS) and McAfee, cybercrimes, which include damage and destruction of data, stolen money, lost property, intellectual property theft, and other areas, currently cost the world almost USD 600 billion each year, or 0.8% of global GDP.
- IT advances, communications technologies, and the smart energy grid are changing the landscape of every country's critical infrastructure and business networks. However, with rapidly evolving technology comes rapidly advancing threats. In 2019, businesses in the United Kingdom were victimized 7,073,069 times, while the US Department of Homeland Security informed that its data had been breached.
- Moreover, cyberattacks in the United States are rising rapidly and have reached an all-time high, primarily owing to the rapidly increasing number of connected devices in the region. In the United States, consumers are using public clouds, and many of their mobile applications are preloaded with their personal information for the convenience of banking, shopping, communication, etc. According to the White House Council of Economic Advisers, the US economy loses approximately USD 57 billion to USD 109 billion per year to harmful cyber activity.
- Due to the ongoing COVID-19 outbreak, the countries across the world have implemented precautionary measures. While schools are being closed, and communities are asked to stay at home, and many organizations are finding a way to enable their employees to work from their homes. This has resulted in a rise in the adoption of video communication platforms. In the past four months, the new domain registration on these video communication platforms, including Zoom, has rapidly increased. According to the Checkpoint Security, since January 2020, more than 1700 unique domains were registered and 25% of which registered in the first week of March 2020.
- In this pandemic, many restaurants switching to online ordering, hence the danger of cyber threats has increased. According to Restaurant Guard, March alone posted a 600% increase in email phishing scams. The company has also quoted that, the Insurance agents must ensure their clients' new business models are protected, and in many cases may have to educate clients on the new exposures and dangers they could face when collecting sensitive customer data such as physical addresses, phone numbers, financial information, and email addresses.
Key Market Trends
Healthcare Segment is Estimated to Hold a Significant Share of the Market Studied
- Due to data proliferation, healthcare is emerging as a significant market for the global cybersecurity insurance market. Digitization has exponentially increased the volume and speed of healthcare data generation. As much as 80% of the data generated by the healthcare industry is likely to be in the cloud by 2020, according to HIPAA. Security is also becoming a major concern.
- Personal data is valuable, which prompts the cybercriminals for a crime. Personal information is being sold on the dark web for as little as USD 5 for a credit card number, USD 30 for an entire identity, or up to USD 1,000 for medical records. It is among the few factors, which have led to an increased demand for cybersecurity.
- The healthcare industry, across the world, is also witnessing multiple data breaches as the health-related data is moving rapidly toward electronic records. This has resulted in an increase in electronic health/medical records, which requires robust security solutions. According to the HIPAA, the top 3 data breaches in the healthcare sector in the United States witnessed a combined loss of more than 5.2 million patient records, including organizations like Accudoc Solutions, UnityPoint Health, and Employees retirement system of Texas.
- Considering these factors, there has been an increase in the number of healthcare-related cyber laws and studies recently. Abbott and The Chertoff Group, security, and risk management advisory group, released key findings from a recent survey of 300 physicians and 100 hospital administrators on cybersecurity challenges in the hospital environment.
- In one Telehealth survey, 69% of the patients expressed that they prefer getting medical care without visiting the hospital. The telemedicine market is expected to grow at a healthy rate since more insurance companies are now offering coverage for these visits as well.
United States to Hold the Major Share in the North American Region
- The United States is a primary hub for all the major organizations across the world. The expansion of the retail industry and the growth of IoT are driving the demand for smart devices and mobiles in the region. The rise in the cost of cyber attacks that can impact the market varies from individuals and corporates to the governments. Thus, securing the data has become a priority in the region.
- Additionally, the autonomous breach protection provider, Cynet, in its recently published State of Breach Protection 2020 Report, has mentioned that over 25% of security alerts are left unattended daily in the United States.
- In the utility industry, the US government mandated the adoption of version 5 of the North American Electric Reliability Corporation Critical Infrastructure Protection (NERC CIP) as the cybersecurity standard, and the healthcare industry abides by HIPPA requirements for securing data. Notably, the United States is experiencing an increasing number of cyber threats. According to the Identity Theft Resource Center (ITRC), the average number of breaches in the country has increased marginally over the past few years.
- According to the ITRC's recent estimates, the average number of data breaches faced by the United States increased from 614 breaches in 2013 to 1473 breaches in 2019. Moreover, the companies in the region are seeking strategic acquisitions to gain more market share. For instance, AT&T introduced its new division called AT&T Cybersecurity by acquiring SIEM solution provider AlienVault.
The cybersecurity insurance is moderately consolidated, with major players offering superior technology and fostering their growth through their existing distribution channels. These technology leaders are investing in innovation, mergers, and acquisitions, and partnership activities to maintain a competitive edge in the market.
- May 2020 - Coalition, the leading cyber insurance, and security company in the US are expanding its offering to Canada-based companies, providing proactive cybersecurity products and services and best-in-class cyber and technology error & omissions insurance to help keep businesses safe. The coalition will offer up to CAD 20 million of comprehensive insurance coverage supported by the financial strength of Swiss Re (A.M. Best A+) to companies with up to CAD 1 billion in annual revenue.
- September 2019 - AXA XL and Accenture have partnered to offer global cyber-security expertise to AXA XL's underwriters, brokers, and clients to strengthen their cyber capabilities and recover from cyber-attacks.
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