The cyber insurance landscape in 2025
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Cyber-attacks are attracting a lot of attention. As nation states spy on each other and hackers attempt to access corporate networks, the media is never short of a cyber story. The effect on the insurance market is equally interesting, demand is rising fast as companies realise the extent of their exposure. Where is it all going?
For a start, it's going to get a lot bigger. Certain trends that are already apparent will boost demand for cyber insurance. Mandatory cover seems to be drawing closer. It's already obligatory in 46 US states for data breach notification. Europe may be heading the same way with its data protection regulation and the Network and Information Security Directive, which will oblige companies to report hacking attacks.
This reporting requirement is likely to be repeated across industries, as companies realise the benefits of sharing information. To date, the whole issue of cyber vulnerability has been rather sensitive due to, for example, concerns over reputational damage or corporate secrets. However, that is changing with the realisation that cyber risks demand a concerted response.
Moving from the regulatory to the private sector, demand for cyber cover from corporates will also grow markedly. Many companies, especially in certain fields, are still without it. As awareness of the threat grows, that will change. Furthermore, popular technologies, such as the Internet of Things (IoT) or Cloud storage, are adding to the risk potential.
To sum up, cyber insurance will be a much bigger market by 2025. With mandatory cover in some sectors and business-driven demand across the board, there is major growth potential.
The challenge for the insurance industry will be to keep pace with innovations and quickly break them down into insurable risks. Companies will be looking for sophisticated and tailor-made solutions.
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