Cyber security insurance provides coverage against losses from cyber attacks such as hacking, data breaches, business interruption, and cyber extortion. With rising digitization and growing adoption of cloud-based services and technologies among organizations, the risks of cyber threats have increased significantly in recent years. Cyber-attacks targeting businesses are growing in frequency as well as severity. Cyber criminals are employing sophisticated techniques to steal sensitive data for financial gains or launching ransom ware to disrupt normal operations until payment is received. Such incidents can have large cost implications on companies in terms of revenue loss, data recovery, legal fines, and reputational damages. There is growing need for businesses to safeguard themselves through cyber risk insurance policies. The global Cyber Security Insurance Market is estimated to be valued at US$ 15.7 Mn in 2024 and is expected to exhibit a CAGR of 7.8% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The increasing frequency and severity of cyber-attacks present a major market opportunity for cyber security insurance providers. Cyber threats have expanded in scale and most businesses, regardless of their size, are vulnerable to attacks. Recent high-profile cyber incidents have caused significant financial and reputational damages to companies. This is raising awareness about the need for appropriate risk mitigation through cyber insurance policies. Cyber security underwriters can develop customized plans for businesses of varying sizes, covering liabilities from a range of risks. They can also provide value-added services around risk assessment, compliance measures, incident response and recovery support. With growing digitization across end-use industries, the cyber security insurance demand is expected to surge remarkably in the coming years.
Porter's Analysis
Threat of new entrants: The cyber security insurance market requires large startup capital to acquire necessary skills and infrastructure. Therefore, the threat of new entrants is moderate.
Bargaining power of buyers: Individual buyers have low bargaining power as insurance providers offer standard policies. However, large corporations have higher bargaining power to negotiate customized policies and premium rates.
Bargaining power of suppliers: A large number of insurance underwriters and brokers operate in this market, giving buyers options to choose from multiple suppliers. This limits the individual supplier bargaining power.
Threat of new substitutes: No direct substitutes exist for cyber security insurance. However, other security solutions like improved network security, firewalls, antivirus software act as complements rather than substitutes.
Competitive rivalry: The market has the presence of global as well as regional players. Intense competition keeps insurance premium rates and policy costs low, benefiting buyers.
SWOT Analysis
Strengths: Growing frequency of cyber attacks globally is driving the demand for cyber security solutions and associated insurance policies.
Weaknesses: High premium rates for small businesses due to lack of resources for advanced security systems. Insurance coverage limitations leave room for disputes.
Opportunities: Rising adoption of digital technologies opens up opportunities for tailored offerings catering to specific industry and location needs.
Threats: Continuous evolution of cyber threats challenges underwriters' abilities to accurately assess risks and set premium rates. Regulations may impact product development flexibility.
Key Takeaways
The Global Cyber Security Insurance Market Size is expected to witness high growth. The Asia Pacific region is expected to be the fastest growing market during the forecast period. Countries like Australia, Japan, Singapore and India are major contributors to the increasing demand.
Regional analysis: North America dominates the market currently due to stringent data protection regulations and increasing sophistication of cyber attacks. However, Asia Pacific is emerging as a high potential region supported by growing digitization and rising incidents of cyber crimes in major countries. Countries like China, India and Southeast Asian nations are witnessing higher cyber security insurance adoption among large enterprises primarily from the banking, IT and utilities sectors.
Key players: Key players operating in the cyber security insurance market are Advacare Pharma, UEBE Medical, Abbott Laboratories, Quidel Corporation, HiLin Life Products Inc., Geratherm Medical AG, Fertility Focus Limited, Fairhaven Health LLC, Church & Dwight Co. Inc., and Prestige Brands Holdings Inc., among others. Advacare Pharma and Abbott Laboratories have leading market shares due to their extensive product portfolios and global sales network.
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