CYBER SECURITY INSURANCE MARKET ANALYSIS

Market Size and Trends

The Cybersecurity Insurance Market is estimated to be valued at US$ 16.06 Bn in 2024 and is expected to reach US$ 58.68 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 20.3% from 2024 to 2031.

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The increasing number of cyberattacks on businesses as well as growing awareness about cyber risks among organizations is driving the need for cybersecurity insurance policies.

The market is expected to witness significant growth during the forecast period. This can be attributed to factors such as the growing stringency of data protection laws and regulations globally and rising government initiatives to spread awareness about cyber threats. Furthermore, the increasing adoption of digital technologies by organizations has also expanded the attack surface for cybercriminals propelling cyber risks and insurance needs.

Increasing Rates of Cyberattacks

The frequency and impact of cyberattacks have been rising significantly in recent years. As businesses increasingly rely on digital technologies and store sensitive data online, they have also expanded the attack surface for malicious actors. Hackers have become more sophisticated in their methods, utilizing new techniques like ransomware to disrupt operations and demand payment. Just a few motivated individuals can wreak havoc by hacking into vulnerable systems and compromising confidential records. High-profile incidents regularly make headlines, affecting millions of customers and costing companies dearly in remediation costs, legal fines, and reputational damage.

The growing threat environment has led to greater awareness of cyber risk exposure. Organizations understand that as technology use deepens, so do the chances of a breach event occurring that can cripple their activities. Even those with strong security may find loopholes exploited. While IT teams work to shore up defenses, ultimately not every vulnerability can be closed. Companies recognize the need to plan for such worst-case scenarios and safeguard themselves financially should an infiltration happen. Insurance provides a means to transfer some of this risk and secure funding to cover major losses and liabilities in the aftermath of an attack.

Market Concentration and Competitive Landscape

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Regulators across industries have mandated new compliance rules in response to data protection laws being enacted worldwide. Taking a multi-pronged approach, directives like General Data Protection Regulation (GDPR) in Europe and state laws in the U.S. aim to give citizens greater control over personal information collection while raising the bar for how companies must manage sensitive records. Heavy non-compliance penalties serve as a strong enforcement mechanism. Organizations that experience a breach now potentially face severe monetary and legal punishments depending on the scope of the incident and whether proper safeguards were in place.

Staying on the right side of regulations involves careful auditing and oversight of IT systems, processes, vendor relationships and more. Keeping documentation and demonstrating accountability places a sizable administrative workload. Coordinating response efforts after a breach to contain damage, notify affected parties and rebuild credibility with stakeholders can overtax internal resources. Cyber insurance provides coverage to obtain expert forensic investigations, legal counsel, credit monitoring services for consumers, and PR assistance during recovery—services that ease the path to returning to regulatory compliance. The policies thus offer a risk management solution that helps address burdens from the evolving cyber governance landscape.

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Many organizations still do not understand the full scope of cyber risks and are not adequately assessing their exposure. Additionally, the threat landscape is constantly evolving as cybercriminals employ more sophisticated tactics. It can also be difficult to accurately model and price policies given the complexity of factors involved. Legacy systems used by insurers may not be robust enough to handle today's risks. Regulatory frameworks are struggling to keep pace with new laws and standards needing to be addressed. All of these elements make underwriting policies and ensuring proper coverage a major challenge.

Market Opportunities: Rising Demand for Cyber Risk Insurance and Opportunities for Innovative Insurers

As the issues of cyber risk become more mainstream, demand for insurance will likely increase significantly. Innovative insurers that develop specialized expertise in emerging threats and develop superior analytical tools will be in the best position to service this growth.

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In terms of Insurance Type, Standalone contributes the highest share of the market owing 64.2% in 2024 to growing demand for customized and specialized cybersecurity insurance policies among organizations. Standalone policies offer bespoke coverage tailored to the specific cybersecurity risks and threats faced by an organization based on its industry, size, geographic presence, and IT infrastructure. They allow companies to choose specific coverage items from a menu and customize policy limits, deductibles, and other terms. This provides more flexible protection compared to off-the-shelf solutions. As cyber threats evolve rapidly and attack surfaces expand due to new technologies, businesses are increasingly relying on customized standalone policies that can keep pace with their dynamic needs. Furthermore, standalone policies eliminate coverage restrictions associated with add-on policies, thereby offering broader protection against unexpected liabilities and costs arising from cyberattacks and data breaches. Their specialized and flexible nature has made them a preferred choice for organizations operating in highly regulated sectors that demand highly tailored risk transfer solutions.

Insights, By Coverage Type- Increasing liabilities from data loss and system failures

In terms of Coverage Type, Liability Coverage contributes the highest share of 65.7% in 2024 of the market due to mounting legal and regulatory pressures on companies to protect sensitive customer information and ensure smooth business operations. Liability policies safeguard companies against costs associated with compensating third parties for losses resulting from data breaches or technology outages caused due to security failures on the policyholder's side. They cover expenses pertaining to payment card industry fines, lawsuits, regulatory/legal actions, credit monitoring services and public relations campaigns in the aftermath of a cyber event. As data protection laws like GDPR have increased penalties for non-compliance, the potential liabilities from a breach have amplified drastically. Moreover, system disruptions can severely hurt customer/partner relationships if not resolved quickly. Faced with enormous financial and reputational downside, businesses are increasingly opting for liability options to transfer these risks. Emerging technologies widening attack surfaces have also fueled demand for liability covers that can help address an unpredictable threat landscape and its consequences.

Insights, By Enterprise Size- Heightened risks from expanding digital infrastructure

In terms of Enterprise Size, Large Enterprises contribute the highest share of 69.2% in 2024 of the market owing to heightened risks stemming from their complex and expansive digital infrastructure. Large corporations accumulate massive amounts of sensitive data worldwide and rely extensively on digital networks, systems and applications to power global operations. This significantly enlarges their attack surface and exposes more entry points for cybercriminals. Furthermore, disruptions at this scale can grind business to a halt and result in immense losses. Large enterprises also face stricter compliance mandates from regulators as any lapses may impact a vast user base. With more to lose financially and in reputational terms, they seek robust cyber insurance programs that can help transfer risks associated with their large and intricate networks. Carriers also prefer insuring larger firms due to greater premium pools and lower administration costs per policy. As digital transformation continues shifting business models online, large organizations are allocating increased budget to cybersecurity covers that can safeguard their sprawling assets and operations holistically.

Regional Insights

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North America has dominated the global cybersecurity insurance market over the past decade owing to 52.1% in 2024, strong industry presence and large market size in the region. With major cybersecurity players and a large tech sector present in countries like the U.S., the awareness and demand for cyber insurance products is significantly higher compared to other regions. The regulatory norms around data privacy and protection are also quite stringent, prompting many organizations to opt for cyber covers.

The pricing of cyber insurance policies in North America tend to be on the higher side since insurers face greater liability risks here due to growing internet usage as well as increasing frequency and sophistication of cyberattacks. However, the large scale of operations in the region allows insurers to offer specialized and tailored products catering to the dynamic needs of different industry verticals. North American players also dominate global insurance brokerage and have helped drive growth of cyber insurance uptake.

Asia Pacific is emerging as the fastest growing regional market for cybersecurity insurance. The digital transformation of economies in countries like China, India, and other Southeast Asian nations has rapidly expanded the attack surface for cybercriminals. This is prompting both public and private sectors to recognize the need for adequate risk mitigation measures, of which insurance is a key component. Several large multinational insurers have also started focusing on this lucrative yet complex market through partnerships with local brokerages having deeper understanding of the regional business landscape and culture.

While pricing of cyber policies is generally lower than mature markets currently due to relatively fewer claims, premiums have been inching up steadily as the risk exposure rises. Moreover, the presence of globally recognized enterprises in APAC industries like financial services, healthcare and manufacturing is encouraging international underwriting firms to develop insurance products tailored to APAC's unique requirements and scale up their presence to tap into the region's high growth potential for years to come.

Market Report Scope

Key Developments

• In March 2023, Saiber Innovation Technologies partnered with CYMAR Management Ltd., a specialist in cyber insurance, to meet the cyber insurance needs of the maritime and logistics sector in the U.A.E. This collaboration aims to safeguard the sector from cyber-attacks.
• In February 2023, Cowbell, a cyber insurance provider, teamed up with Millennial Shift Technologies to offer its cyber insurance programs, Cowbell Prime 100 and 250, through Millennial Shift's e-trading broker platform, mFactor, to enhance operational efficiency.
• In July 2022, SBI General Insurance Company Limited is a subsidiary of the State Bank of India (SBI), introduced the SBI General Cyber VaultEdge insurance plan, providing coverage against financial losses caused by cyber risks and attacks.
• In October 2022, AXA XL is the property and casualty (P&C) and specialty risk division of AXA, a multinational insurance and financial services company established an incident response team in the Americas. This Cyber Incident Response team demonstrates the company's commitment to clients, offering assistance before, during, and after cyber incidents.

*Definition: The cybersecurity insurance market provides insurance policies and coverage for cyber threats and security risks faced by organizations. It covers costs related to damages from cyberattacks, data breaches, network failures, and other cyber incidents. Policies in this market help protect businesses against liability lawsuits, pay for forensic investigations, fund public relations services in case of a breach, and cover lost income and extra expenses incurred while systems are down. The cybersecurity insurance market has seen significant growth in recent years as cyber risks have increased for companies of all sizes.

Market Segmentation

•  Insurance Type Insights (Revenue, US$ BN, 2019 - 2031)
• • Standalone
  • Tailored
•  Coverage Type Insights (Revenue, US$ BN, 2019 - 2031)
• • First-party
  • Liability Coverage
•  Enterprise Size Insights (Revenue, US$ BN, 2019 - 2031)
• • SMEs
  • Large Enterprise
•  End user Insights (Revenue, US$ BN, 2019 - 2031)
• • Healthcare
  • Retail
  • BFSI
  • IT & Telecom
  • Manufacturing
  • Others (Government, Travel & Tourism)
• Regional Insights (Revenue, US$ BN, 2019 - 2031)
• • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • BitSight
  • Prevalent
  • RedSeal
  • SecurityScorecard
  • Cyber Indemnity Solutions
  • Allianz
  • AIG
  • Aon
  • Arthur J. Gallagher & Co
  • Travelers Insurance
  • AXA XL
  • Axis
  • Chubb
  • Travelers Indemnity Company
  • American International Group, Inc.
  • Beazley Group
  • CNA Financial Corporation
  • AXIS Capital Holdings Limited
  • BCS Financial Corporation
  • Zurich Insurance
  • The Hanover Insurance, Inc.