By Charles Abuede
- Insurance bears 39% of losses caused by malicious data breaches globally
- More awareness for insurance coverage on cyber risks imminent amidst rising tech progress
The global cyber insurance market is projected to grow by 21 per cent year-on-year and reach a $9.5 billion valuation next year owing to the growing number of firms taking preventive measures against cyberattacks. The figure is expected to jump by 78 per cent to $13.9 billion in the next three years and hit the $20.4 billion valuation two years later. However, as the year 2020 rolls away, the global cyber insurance market is expected to hit $7.8 billion value, data gathered by MarketsandMarkets and accessed by Business A.M. has shown.
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As the years go by, cyber-attacks and data breaches have become one of the biggest risks in the business segment, leading to the compromise of sensitive data and causing a tremendous financial hit to companies and firms globally. But as the advancements in technology and data applications in the business sector begin to be on the rise, several firms are getting more defenceless to these attacks and then more awareness for insurance coverage on cyber risks became imminent, the research report explained.
According to the MarketsandMarkets report, the growing number of firms taking preventive measures against cyberattacks has led to the massively positive growth in the entire cyber insurance sector.
Also, in a 2019 report by Hiscox Cyber Readiness, it is further shown that 41 per cent of companies from Europe and the United States detailed that they have already adopted cyber insurance, while another 30 per cent of them were planning to adopt it.
Industrial distribution of cyber insurance claims globally between 2013 and 2019
Stressing on the importance of cybersecurity insurance, the Willis Towers Watson Cyber claims analysis report and the Ponemon Institute’s Cost of a Data Breach Report 2020 highlighted that one-quarter of all cyber insurance claims between 2013 and 2019 come from the healthcare sector with $7.13 million data breach cost. This is 84 per cent above the global average and also has the highest average time to identify a violation at 329 days.
Ranking second on the list in the average cost of spotted breach is the energy industry with $6.39 million. Out of 17 sectors surveyed, the financial services, pharmaceutical industry, and technology sector followed, with $5.85 million, $5.06 million, and $5.04 million in average data breach cost, respectively.
Also, while the IT and telecommunications segment positions itself on second with more than 10 per cent of all cyber insurance claims between 2013 and 2019, the insurance, retail and wholesale and manufacturing sectors rounded out the top five, with 9.9 per cent, 9.2 per cent, and 7.1 per cent share, correspondingly.
While cybersecurity insurance can provide support to businesses, so cyber attacks don`t cripple their business should a costly data breach happen, the affected firm may not have enough resources to resolve these issues and cover the losses. Consequently, insurance products can help companies and organisations hedge against the potentially devastating effects of ransomware, malware, distributed denial-of-service (DDoS) attacks or any other cyber-attack used to compromise a network and sensitive data.
Asian Pacific most target region of malicious data
Also, statistics show that almost 75 per cent of cyber insurance claims in this present time involve an insuring clause related to breach incident response and crisis management.
Thus, data privacy infringements represent the second-most common insuring clause, followed by cyber extortion. However, of the sectors impinged on by cyber insurance losses, the distribution of losses caused by malicious data breaches was chiefly in the insurance sector by 39 per cent. Similarly, the retail and wholesale industry held 30 per cent of such losses between 2013 and 2019 as well as the IT and the telecommunications industry, the manufacturing sector, and the healthcare market bearing 24 per cent, 22 per cent, and 18 per cent share, respectively.
A breakdown from the report by the 2020 Trustwave Global Security showed that Asia Pacific stands to be the most hit region of malicious data breaches and further revealed that 37 per cent of all cyberattacks in 2019 took place in the region, the North American region stayed second on the log with 33 per cent while Europe, the Middle East and Africa accounted for only 25 per cent aggregately.
Thus, the United States credibly leads the pack of all surveyed countries with an average data breach cost of $8.64 million, rising by 5.5 per cent within a year and Germany leads among European countries with an average data breach cost of $4.45 million in 2020, dipping 7 per cent year-on-year.