If there’s one thing we can definitely say about the post-2020 era is that we’re all more open to “going digital.” This comes with its own advantages and disadvantages. We are more open to remote work, and have access to more opportunities than ever, but we’re also more likely to become victims of cybercrime too. Cyber insurance stats and cybersecurity research show that now, more than ever, businesses of all sizes are more inclined to pay more attention to online protection and insurance.
Why Cyber Insurance?
In a world where the risk of cybercrime continues to grow and cyber criminals are becoming smarter by the day, purchasing cyber insurance can help you manage specific risks associated with cyber attacks.
While cyber insurance does not replace a strong cyber security strategy – it can help fill in key gaps and protect your business in the event of a cyber attack. There are numerous advantages to purchasing cyber insurance which include:
- You can manage and transfer risks: By purchasing a cyber insurance policy, you are essentially transferring the risk of a cyber attack to the insurance company. This means that if your business is attacked, you will not have to bear the brunt of the financial loss – the insurance company will cover it.
- It can help offset expenses: A cyber attack can be expensive – from the cost of hiring a forensic team to manage the aftermath of the attack to the cost of notifying affected customers, you’ll rack up quite the bill. A cyber insurance policy can help you offset some of these expenses.
- It can protect your business reputation: In the event that your business suffers a cyber-attack and customer data is compromised, it can have a serious impact on your reputation. A cyber insurance policy can help you cover the costs of PR and communication efforts to repair your reputation in the event of such an attack.
We’re heading towards major changes in the cyber insurance market — In this article, we’ll walk you through some of the essential cyber insurance statistics all small to medium-sized enterprises (SMEs) should be aware of.
Cybersecurity Statistics at Large
In 2020, the average cost of a data breach was $3.86 million. One year later, that number had grown to a worrying $4.24 million. For SMEs, this cost can be even more of a burden, given that budgets are relatively tight during a company’s early years. SMEs just may not be able to handle that kind of cost.
These growing numbers didn’t pop out of nowhere. The pandemic, a larger remote workforce, as well as a growing number of cyberattacks – have all contributed to an increase of more than 10% in terms of data breach costs.
Here are some relevant cybersecurity stats to know:
- According to the Internet Crime Report issued by the FBI, there were 69% more cybercrime reports in 2020 than in 2019. In 2021, the number of reported complaints totaled 847,376.
- To counteract the growing number of cyber attacks, the information security market is growing and adapting. According to AgileIntel Research, the market was valued at more than $176 billion in 2021 and it is predicted to grow at a compound annual growth rate of more than 10% between 2022 and 2029.
- 2020 saw a huge surge in attacks, a trend that continued in 2021. According to the aforementioned FBI report, phishing and other types of social attacks grew by 197.6% from 2019 to 2020 and by more than 34% from 2020 to 2021.
- Identity theft grew by more than 169% from 2019 to 2020 and by more than 16% from 2020 to 2021.
- In 2021, the Healthcare industry recorded the second-highest cost of data breaches in the U.S., at $9.23 million.
- In the same year, 43% of cyber attacks targeted small businesses (and the trend has not been on a downward spiral in this respect)
- The number of ransomware attacks was 150% higher in 2021 than in 2020. Moreover, the average ransomware payment shot up by 82% within the time span, both data points showing a growing tendency even past the first wave of the pandemic
- The increase in cybercrime is driving more companies to invest more in cybersecurity. From 2013 to 2021, the number of job openings in cybersecurity grew from 1 million to 3.5 million.
- According to a recent study, no less than 98% of remote workers use a personal device for work.
- This puts organizations at risk as 67% of cyberattacks target remote workers.
- In parallel, the number of remote workers has grown exponentially since the pandemic started. Before COVID-19, 47% of the workers in the US had never worked remotely. After COVID-19, 44% of workers work remotely for 5+ days/ week.
- On the other hand, the Financial and Utilities industries ranked as the third, respectively fourth most affected victims of cybercrime.
Cyber Insurance Stats: A Pandemic Aftermath
Although it’s a relative newcomer to cybersecurity and insurance, cyber insurance has grown to be a key component in every business’ cybersecurity plan. We’ve found data showing that cyber insurance spending will continue to grow over the following years. However, due to recent industry shifts, it’s harder for businesses to get cyber insurance that fits their needs (and pockets). Cyber insurance has found itself at a crossroads.
Here are some of the most important data points to keep in mind:
- In 2022, the average sum of premiums paid by businesses to cyber insurers increased to $5.5 billion.
- Due to the increase in ransomware attacks (as well as other types of attacks), the loss environment of the global insurance market has intensified, with insurance loss ratios jumping from 60% in the past to 80% in 2021.
- According to the National Association of Insurance Commissioners, U.S. insurers writing cyber coverage were reported at $2.75 billion in direct written premiums in 2020 (an increase of 21.7% from 2019.)
- In 2016, in the U.S. the total policies in force (standalone and package policies combined) amounted to 2,110,571. In 2019, the total had reached 3,314,347, and in 2020, it reached 4,019,428, showing a steeper increase than ever before (17.5%, to be more specific.)
- The highest average percentage of cyber insurance claims between 2013 and 2019 have been for data breach/incident response claims — they make up 73% of all claims issued.
- In 2020, hacks and human error are ranked among the top two most common causes of breaches (totaling 67% of the total amount of data breaches.)
- By 2025, cyber insurance claims are estimated to reach $20 billion, likely as a result of increased cyber insurance adoption due to the continued impact of cyber risks.
Cyber Insurance Stats on Adoption Rates
The first cyber insurance policy ever written was recorded in 1997. Since then, cyber insurance has branched into a standalone type of insurance, frequently provided by insurance companies specializing in cybercrime and cyber resilience.
- In 2019, 58% of large businesses and only 21% of small businesses had a cyber insurance policy.
- Overall, cyber insurance adoption rates have grown from 26% in 2016 to 47% in 2020.
- According to the aforementioned study, the highest adoption rates in 2019 were recorded in the Educational, Healthcare, and Technology and Communications industries.
- The lowest adoption rates in 2019 were recorded in the Financial, Manufacturing, Retail, and Utilities industries.
- Cyber insurance adoption rates have grown significantly across all industries from 2019 to 2020, but the Hospitality and Gaming industry recorded the highest rates (from little over 60% to nearly 80%.)
- The highest cyber insurance market growth was recorded in the Asia-Pacific region, followed by Europe, and then by the United States.
The cyber insurance market has definitely changed a lot over the past couple of years with the pandemic (as well as digital transformation) playing a major role. The cyber insurance market is continuing to mature, with some of the players forging partnerships, while others are creating insurance packages that focus more on other segments like SMEs, for example.
The following years are likely to show even more growth in the cyber insurance market with more stability expected in terms of how premiums will adapt to growing (and changing) cyber threats.
One thing’s for certain: we are looking at interesting times ahead of us. Regardless of where the market will go, both building cyber resilience and purchasing cyber insurance sooner will prove to be advantageous in the long run, particularly for small to medium businesses, still vastly uncovered and a growing target for cybercriminal activity.
For more information on how SolCyber can help expedite your cyber insurance application process and potentially save you up to 30% off the premiums, read about our SolCyber Insurance+ Program or contact us.
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