The global cyber insurance market was valued at $3.4bn (£2.5bn) last year, but is set to more than quadruple to $16.9bn by 2023, according to a report from P&S Market Research.
It reveals that industry leaders believe loss of brand reputation is the main reason for getting cyber coverage, with the banking, financial services and insurance (BFSI) industry the largest consumer.
The report comes after a number of high profile cyber attacks on firms such as Deloitte and Tesco Bank exposed how unauthorised access to critical data can result in huge losses of enterprise value.
“From individual companies to government organisations, an attack by a hacker can inflict huge financial loss, corporate embarrassment, and business continuity failure,” P&S Market Research said.
“This had led to an increase in the demand for cyber liabilities and sophisticated policy cover by business leaders, to protect the enterprise data from cyber-attacks and cyber criminals.”
The research shows that the BFSI industry contributed more than 35% of the global market share for cyber insurance last year, which is thought to reflect the sectors vulnerability to hacks.
However, retail and manufacturing industries are expected to experience the biggest growth in market share over the next five years due to numerous cyber challenges and risks present in the industry.
To date, the US has been the largest market, accounting for more than 90% of global revenue in 2016; however, the rest of the world is where sales growth is expected to rise fastest between now and 2023.
The report describes the cyber insurance industry as “moderately competitive”, explaining how firms are investing in new product launches to reach their customers in the most effective and efficient way
However, it reveals that the majority of consumers are large enterprises with high purchasing power and sufficient funds for risk insurance, and that most SMEs are unable to afford expensive cover.
“One of the major challenges to the growth of the market exists around the pricing, and the modeling of risk aggregation of the cyber incidents that resulted in physical damage in the past,” P&S Market Research explained.
“Lack of education also creates a hindrance to the growth of the cyber insurance market as it leads to lazy decisions from the management and operations of all-sized enterprises.”
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