Cyber insurance market to see rapid growth through 2022Posted On: Dec. 7, 2016 9:25 AM CST
The global cyber insurance market, dominated by North America, is expected to generate $14 billion in gross premiums by 2022, growing at a compound annual growth rate of nearly 28% as insurers expand coverage to other regions, a new study says.
The current market size is around $3 billion, according to various estimates.
Portland, Oregon-based Allied Market Research said in its “Cyber Insurance Market — Global Opportunity Analysis and Industry Forecasts, 2014-2022” study, released Monday, that North America accounted for about 87% of the overall cyber insurance market in 2015 and will continue its dominance during the forecast period.
Mandatory legislation regarding cyber security in several U.S. states has led to higher penetration of cyber liability insurance policies.
In addition, the study points to the rise in cyber attacks in recent years, such as the one on regional energy distribution companies in Ukraine, the system breach of the health insurer Anthem Inc., the breach of the White House’s unclassified network, and the massive customer data breaches faced by LinkedIn and Twitter.
However, the U.S. cyber insurance industry has become mature, Allied said, and growth of cyber insurance penetration is projected to slow down.
In comparison, Europe has less penetration of cyber insurance liability policies. In April, however, the European Council passed the General Data Protection Regulation, which is scheduled to go into effect in 2018 and is projected to spur demand for the coverage.
Though Asia-Pacific accounts for a negligible percentage share, the study said, the region is expected to grow at a significant compound annual growth rate during the forecast period due to a significant increase in ransomware attacks.
The region is considered the top target for cyber attacks, owing to poor protection against cyber attacks in Asian companies.
The report said that Australia, New Zealand, Singapore, South Korea, and Japan, collectively known as the “Cyber Five,” are more vulnerable to cyber attacks, and South Korea tops the list.
Financial institutions and information technology firms were early adopters of cyber insurance policies, Allied said. Other industries followed as cyber attacks evolved, and the health care industry has a higher penetration of cyber liability insurance policies due to the vast amount of third-party data that is available to them.
“Organizations from all industries need coverage for liability and property exposure, which is a result of cyber-attacks,” Yogiata Sharma, research analyst for consumer goods research at Allied Market Research, said in a statement. “This is an opportunity for insurers and reinsurers to innovate cyber insurance products that manage various degrees of risks and cover cost-associated data breaches, credit monitoring, forensic investigations, reputation management, and business interruption."