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Insurance for rising cybersecurity risks

The cyber insurance market is projected to grow from $10.3 billion in 2023 to $17.6 billion by 2028, at a compound annual growth rate of 11.4 per cent (File photograph)

Observers forecast a market rise for cybersecurity insurance as cyber threats become more frequent and broader coverage and sector-specific policies become more common.

The evolving cyber threats and rising business awareness, advanced risk assessment techniques, regulatory influence and cybersecurity collaborations may shape the market.

And that insurance market is projected to grow from $10.3 billion in 2023 to $17.6 billion by 2028, at a compound annual growth rate of 11.4 per cent, according to a new report by management consulting firm MarketsandMarkets.

The rise in cyber threats, such as data breaches, ransomware and phishing attacks, has driven the demand for cybersecurity insurance as organisations seek financial protection against potential losses.

The demand for dedicated cybersecurity insurance policies and the need to mitigate the risks associated with "silent cyber" have led to the increasing popularity of stand-alone cybersecurity insurance policies.

These stand-alone policies are projected to surpass packaged cybersecurity insurance policies regarding market growth. Organisations are increasingly concerned about cyber-risks and seek specialised coverage solely for cyber-risk protection, driving the demand for stand-alone cyber policies.

Insurance providers such as AIG, Lloyd's, and Allianz are embracing affirmative cyber and witnessing the growth of stand-alone policies. These policies are designed to address more complex cyber-risks compared to packaged cybersecurity insurance.

Marketsandmarkets says that based on insurance provider end users, healthcare and life sciences is projected to register the highest CAGR during the forecast period.

The healthcare industry faces various challenges, including regulatory fluctuations and the ever-evolving landscape of cyberattacks and breaches.

Compliance with privacy and data security regulations necessitate the reliance of healthcare organisations on cybersecurity insurance policies to cover penalty fees.

The Covid-19 pandemic has exacerbated cyber threats, with healthcare organisations experiencing increased attacks like ransomware and misinformation campaigns. Cybersecurity insurance is a crucial safeguard for healthcare providers, offering financial protection against cybercrimes, ransomware, data breaches, and other cybersecurity incidents.

Based on region, Asia-Pacific is projected to register the highest CAGR during the forecast period.

Asia-Pacific, an emerging economy, is projected to achieve the highest CAGR in the cybersecurity insurance market during the forecast period.

Countries in the Asia-Pacific region, such as China, Japan, Australia, New Zealand and Singapore, are highly concerned about rising security spending due to increasing cyber threats.

Marketsandmarkets says with its strong government regulations and technological advancements, Asia-Pacific presents promising growth opportunities for the cybersecurity insurance market.

Insecure interfaces, data breaches, and data losses are top cybersecurity risks in the region, fuelled by rapid connectivity and digital transformation.

Asia-Pacific faces an 80 per cent higher risk of cyberattacks than other regions.

Increasing regulatory measures are expected to drive the demand for cybersecurity insurance.

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Published August 24, 2023 at 7:58 am (Updated August 24, 2023 at 7:35 am)

Insurance for rising cybersecurity risks

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