The cyber insurance market is growing cautiously, but opportunities exist for incumbents and startups that target this market.
High-profile cyber attacks in recent years have raised concerns for companies of all sizes across all industries. More than half of US businesses reported having a cyber incident in 2019, according to Hiscox’s Cyber Readiness Report. Cyber was also the top business risk for companies, according to 2,700 risk management experts Allianz interviewed.
Traditional commercial insurance products do not cover data breaches, network interruptions, or other cyber risks. While companies are heavily investing directly in cybersecurity technologies to prevent these attacks, they’re also increasingly purchasing cyber insurance policies to protect themselves in case of an attack.
“I don’t think we or anybody else really knows what they’re doing when writing cyber.” — Warren Buffett, 2018
The complexities of these risks and the lack of extensive historical claims data have led to some uncertainty in the cyber insurance market. However, the nascent market, projected to hit $20B by 2025, presents opportunity for insurance companies.