International. Cybersecurity revenues in the insurance sector will increase at a compound annual growth rate of more than 10%, from $6.4 billion in 2020 to $10.6 billion in 2025, GlobalData forecasts.
GlobalData's report 'Cybersecurity in Insurance' reveals that insurers should approach the issue with caution or risk reputational damage, either from a data breach or from refusing to make a cyber insurance payment.
Amrit Dhami, Associate Analyst for Thematic Research at GlobalData, comments: "Inevitably, the rapid digital transformation of the insurance sector is driving the rise of cyber risk. The sector is rapidly adopting digital technologies including cloud, the Internet of Things, artificial intelligence and data analytics to compete with insurtechs, meet consumer demands for personalization and convenient digital interfaces, and in response to the COVID-19 pandemic.
"The war between Russia and Ukraine has increased the likelihood of state-sponsored cyberattacks targeting critical infrastructure, military operations and business. Such attacks not only target insurers, but generate costly payments and damage the reputations of those who are reluctant to pay. This was the case for Ace American, which was sued by its customer Merck in 2022 for failing to cover its losses during the 2017 NotPetya ransomware attack."
GlobalData's 2021 SMB Insurance Survey (sample size of 2001 SMBs) concluded that cyber insurance adoption among UK SMEs fell from 12.6% in 2020 to an even lower 11.2% in 2021.
Dhami concludes: "Of course, it's not just insurers that face the highest cyber risk, and everything feeds back to the insurance sector through the cyber insurance product. Cyber insurance is now much riskier for insurers, as some ransomware gangs reportedly target companies with cyber insurance policies as they are more likely to pay a ransom. It is therefore no surprise that companies such as AXA and AIG are reconsidering their cyber policies to mitigate the increased risk of a payment through higher premiums and/or reduced customer coverage.
"Simultaneously, fewer SMEs are looking to buy cyber insurance due to the cost-of-living crisis and rising overhead, making it difficult for them to afford coverage. This problem is only exacerbated by insurers' rising cyber insurance prices."
