The global cyber insurance market is poised for major growth over the next six years, soaring from $5.6bn (£4.2bn) in 2019 to $32.5bn (£24.4bn) by 2027 – representing a compound annual growth rate of 23.76% – as firms wake up to the need to protect themselves against hack attacks.
So says a new report by Verified Market Research, which also cites a surge in mandatory regulations and legislation covering cybersecurity which will boost demand for insurance protection.
The move comes as ransomware attacks have become increasingly prevalent, with Manchester United FC, Japanese video game giant Capcom, charity CRM software giant Blackbaud, Pitney Bowes and Cognizant among the numerous high profile victims so far this year.
Meanwhile, Government regulatory bodies and law enforcement agencies worldwide have also taken initiatives to tighten data security and protection.
For example, in February 2020, the Californian assembly introduced a bill to make cyber insurance mandatory to process regulated and protected personal information for all state contractors.
The rise in data privacy laws such as GDPR and the Payment Card Industry Data Security Standard (PCI DSS) in the EU as well as the Personally Identifiable Information (PII) and the Health Insurance Portability and Accountability Act (HIPAA) in the US, are persuading insurance providers to focus on cyber insurance measures.
Covid-19 has also had a rope to play in speeding up adoption of digital transformation strategies, which in turn has triggered a rise in cyberattacks, the report states, adding that governance requirements and new regulations in data security are expected to drive the market forward in the future.
However, according to Gartner’s head of global financial services research Juergen Weiss, insurance providers are starting to take a more proactive approach to cybersecurity.
He said: “The insurance industry is moving away from being a lender of last resort and payouts, to more like a risk advisor and a partner for business operations. Insurers are now putting black boxes in cars to track driving behaviour – they want to price more accurately and ideally change behaviour.
“And the same is happening in the cyber insurance space. They want to make sure that firms adapt to the risk. It’s a mix of audit, protection and prevented loss.”
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