Over the years, cyberattacks and data breaches have become one of the biggest risks in the business sector, compromising sensitive data and causing a massive financial hit to companies and organizations worldwide. As data applications increase and technology advances, organizations are becoming more vulnerable to these attacks and more aware of the need for cyber-risk insurance coverage. According to data presented by Finaria, the global cyber insurance market is expected to grow by 21% year over year to reach a value of $9.5 billion in 2021.
When a costly data breach occurs, companies don’t always have enough resources to resolve the issues and cover the losses. Cybersecurity insurance provides support to businesses, so cyberattacks don`t cripple their business. These insurance products help companies and organizations hedge against the potentially devastating effects of ransomware, malware, distributed denial-of-service (DDoS) attacks, or other types of cyberattacks.
The Hiscox Cyber Readiness Report 2019 showed 41% of firms from Europe and the U.S. reported that they have already adopted cyber insurance. Another 30% of them were planning to in 2020.
The growing number of companies taking precautionary measures against cyberattacks led to the impressive growth of the entire sector. In 2020, the global cyber insurance market is expected to hit a $7.8 billion value, revealed the MarketsandMarkets report. Statistics show that by 2025, the cyber insurance market is set to reach $20.4 billion.
The Willis Towers Watson Cyber claims analysis report revealed almost one-quarter of all cyber insurance claims between 2013 and 2019 were in the health care sector. The IT and telecommunications market ranked second, with more than 10% of all cyber insurance claims in this period. Insurance, retail and wholesale, and manufacturing sectors rounded out the top five, with a 9.9%, 9.2%, and 7.1% share, respectively.
Statistics also show that almost 75% of cyber insurance claims in this period involved an insuring clause related to breach incident response and crisis management. Data privacy breaches represented the second most common insuring clause, followed by cyber extortion.
Of the industries most affected by cyber insurance losses, the share of loss events caused by malicious data breaches was highest in the insurance sector at 39%. The retail and wholesale industry had 30% of such losses between 2013 and 2019. IT and telecommunications, manufacturing, and health care followed with a 24%, 22%, and 18% share, respectively.
The 2020 Trustwave Global Security Report revealed the Asia-Pacific region represents the most targeted region of malicious data breaches. In 2019, 37% of all cyberattacks occurred in this region. North America ranked second with 33% of all cyber incidents last year. Europe, the Middle East, and Africa follow with a 25% share.
The Ponemon Institute's Cost of a Data Breach Report 2020 showed that the health care industry tops the list of the most expensive data breaches with a $7.13 million average data breach cost, 84% more than the global average. Besides leading in the average cost of a data breach, the health care industry also had the highest average time to identify a violation — 329 days.
The energy industry ranked second of the 17 sectors surveyed, with $6.39 million in average cost and 254 days to spot a breach. Financial services, the pharma industry, and the technology sector follow, with $5.85 million, $5.06 million, and $5.04 million in average data breach cost, respectively.
Analyzed by geography, the U.S. convincingly leads among all surveyed countries with an average data breach cost of $8.64 million, a 5.5% increase in a year. Germany leads among European countries with an average data breach cost of $4.45 million in 2020, a 7% drop year-on-year, while companies usually need 160 days to identify a data breach.