According to Report Ocean, the Global Cyber Security Insurance Market, which was valued at approximately $4.63 billion in 2017 is anticipated to grow at a rate of more than 24.51% over the period 2018-2025. Another estimate from The Research Insights (link to enquire before buying) is even more optimistic, placing CAGR at +27% for the period 2019 to 2026.
The OECD (Organisation for Economic Co-operation & Development) estimates that the U.S. market accounts for approximately 80% to 90% of the total cyber insurance market. The EU accounts for about 5% to 9%.
The most common types of cyber insurance coverage offered in the EU are business interruption and data restoration. Cyber extortion coverage, and coverage for legal support and reputational issues are also available in the EU, although to a lesser extent. The introduction of the EU’s General Data Protection Regulation (GDPR) in May 2018 has increased awareness of the risk and associated costs of data breaches.
Most cyber insurance policyholders are in the U.S. but many policies are written by non-U.S. insurers. The UK is a major cyber insurance centre: in 2017, approximately 25% of global gross written premiums for cyber insurance were underwritten through Lloyd’s of London syndicates.
Key growth factors
Despite the relative immaturity of the cybersecurity insurance market, it is forecast to grow rapidly, fuelled by rapidly increasing demand and awareness of the scale of threat. Between now and 2025, five key factors are likely to drive the cybersecurity insurance market. These are:
- An increasing number of cyber attacks;
- A rapidly growing number of Internet of Things and IIoT (Industrial Internet of Things) devices and related vulnerabilities;
- Global enhancement of regulations on personally identifiable information loss (like GDPR, CCPA, etc.);
- Increasing awareness of cyber thefts among small- and medium-sized enterprises providing digital services;
- A growing number of companies view cybersecurity insurance as a risk mitigation strategy.
The North American market
According to analysts AM Best, in North America direct premiums written for both standalone and packaged cyber policies grew about 12% in 2018 from $1.8 billion to $2.0 billion. This represented a slight slowdown from a growth rate of 30% for the previous two years. In 2018, 528 U.S. insurers reported writing cyber insurance, up from 471 in 2017.