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Cyber Insurance Market Overview
The total valuation of the global cyber insurance market stood at $3.41 billion in 2016, and it is projected to grow at a 20.0% CAGR during the forecast period (2017–2023). On the basis of service, the market is categorized into insurance, claim service, and risk consulting. Among these, the claim service category was the fastest growing during the historical period (2013–2016), due to the rising threat to digital capital and a risk of business failure because of cyber-attacks. Furthermore, risk consulting is predicted to grow significantly during the forecast period, due to an increasing threat of cyber risks.
AMERICAS CYBER INSURANCE MARKET, BY SERVICE, $M (2013 – 2023)
Insurance companies are aware of the vast scope for innovation in the sector, as they are on the path to developing new products and speeding up their go-to-market strategy. Insurance providers are providing plans at lower premiums and in a greater coverage area, in order to differentiate their products from that of competitors. The concept of internet of things (IoT) has revolutionized the cyber insurance market. The information obtained from sensors can be transformed to valuable insights for assessing the cyber risk more accurately, while offering an unparalleled access to the granular data of a business and its operations. IoT is expected to change the way customers interact with the insurance providers.
A majority of insurance providers have been receiving proposals in the recent years for cyber insurance, due to the increasing cyber risks, thereby leading to a rise in the demand for cyber insurance. According to the study, the overall price coverage is a major factor in consideration before the sale of cyber insurance solutions as cited by 75.0% of the underwrites. Ease of policy applications and the breadth of cyber cover are a few other factors taken into consideration while making decisions regarding the purchase of cyber insurance solutions.
In 2016, the Americas stood as the largest market for cyber insurance, generating 90.0% of the total revenue for the market. This geographical category is further projected to remain the largest market during the forecast period. The growth can be attributed to the growing awareness among SME’s to adopt cyber insurance solutions.
Other countries such as Germany, China, Japan and India have been severely impacted by recent cyber-attacks; hence, the demand for effective cyber insurance solutions has increased manifold.
Cyber Insurance Market Dynamics
End-users ranging from major financial institutions to individuals trying to gain access to their personal email have been victims of numerous denial of service (DoS) attacks, which have been quite prevalent in the recent past. Businesses across all industries suffered heavy damages in terms of revenue because of such attacks. For instance, in October 2016, the distributed denial of service (DDoS) attack against Dyn, a DNS provider, impacted Netflix, Airbnb, Twitter, Spotify, and a few other companies’ websites.
Financial motives have been the major reasons behind DoS attacks. Cyber insurance providers keep a check on the global threat landscape and understand the latest trends in DoS attacks. Data-intensive enterprises are prone to operational risks arising out of malicious codes, as these enterprises often rely on previously stored data. To deal with any revenue loss due to these attacks, enterprises are increasingly adopting cyber insurance solutions.
One of the main factors driving the cyber insurance market is the existing vulnerabilities in supply chain that can be exploited by hackers, which has greatly amplified the pre-existing challenges in supply chain management. In case of a breach in the sensitive data of the supply chain, businesses experience a drop in customer confidence, hit in the stock prices, penalties, and legal costs.
In May 2017, businesses around the world were the prime targets of a cyber extortion campaign. A ransomware was spread to over 300,000 systems in over 150 countries by exploiting a single vulnerability within the systems. This has been one of the most noted cyber-catastrophes ever faced, which affected sectors such as manufacturing and healthcare. Attacks such as this are driving the cyber insurance market, with companies taking steps to be better prepared for the impending losses.
The cyber insurance market is witnessing a hinderance in its growth because of ineffective risk assessment of cyber incidents that have resulted in physical damage in the past and also due to the high priced insurance premiums. Further, the lack of understanding about the business and cyber insurance leads to inactive decision making from the management, which hampers the growth of the market.
Cyber Insurance Market Competitive Landscape
The intensity of rivalry in the global cyber insurance market is moderate, with few of the players enjoying a monopoly in specific offerings. American International Group Inc., Chubb Limited, Zurich Insurance Group AG, XL Group Ltd., Berkshire Hathaway Inc., Allianz Global Corporate & Specialty SE, and Munich Re Group are some of the key players operating in the market.
Companies across the globe are focusing on improving their offerings. For instance, in March 2017, Chubb Ignite was launched by Chubb Limited; it is an online platform for brokers, which would allow them to quote insurance online and be associated with SMEs, providing instant documentation in a shorter time period. With the product launch, brokers have been benefitted by its client-centric approach, which allows them to trade the client information at a single place.
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