Cyber insurance could be worth $20.4bn by 2025
According to conducted by MarktesandMarkets (M&M), the cyber insurance market has the potential to be worth US$20.4bn globally in five years.
Such a prediction, if correct, would represent a 161.5% increase on its 2020 valuation ($7.8bn). A line of insurance specifically for the protection of enterprises against online threats, M&M concludes that the increasingly sophisticated nature of modern cyber attacks will be fundamentally responsible for this growth.
Significantly, the company also highlights COVID-19 as a core accelerator: as more companies and industries embraced remote working methods and incorporated more digital technology into their operations, a simultaneous rise in cyber criminal activity followed.
However, despite the mounting need for cyber insurance, its relatively high cost (owing to several high-profile ransomware-related payouts) is slowing down adoption and causing many companies to focus on augmenting cybersecurity instead.
Furthermore, the limited scope of coverage, opaque policy terms and a general lack of familiarity regarding cyber insurance continue to stymie its potential growth.
It is possible, though, states M&M, that breakthrough deployments of artificial intelligence (AI) and blockchain technology could mitigate this problem and present an opportunity for the industry:
“The integration of these technologies with risk analytics solutions would address some of the key challenges and pain points faced by cyber insurance companies.
“The advent of advanced technologies facilitates faster transactions and settlements, which helps financial institutions and their customers conduct transactions more easily while eliminating the intermediary charging fee.”
According to M&M’s findings, the North American region holds the greatest potential for development; its trove of world-leading tech companies, such as and , and a generally well-financed economy lends itself well to further R&D in the field of cyber insurance.
With other concluding that insurance entities will become more akin to ‘technology companies handling insurance’ than vice versa, the importance and necessity of cyber insurance to the future market appears to corroborate M&M’s predictions.