The surge in cyber insurance and what it means for your business

The cyber insurance market is set for explosive growth as organizations increasingly seek financial protection against rising cyber threats. This surge in demand reflects a broader shift in how businesses approach risk management, viewing cyber insurance not just as an option but as a necessity.

As the market evolves, insurers and businesses alike must adapt to meet the complex demands of protecting against the financial impacts of cyber incidents. The anticipated growth underscores a shift towards integrating cyber insurance into the core of organizational resilience strategies.

Cyber insurance set for explosive growth

CyberCube | Projecting Cyber Insurance Growth: A 10-Year US Market Outlook | September 2024

• CyberCube has modeled three CAGR factors for the US insurance industry to 2034: 10% growth resulting in $17 billion of premium; 20% growth leading to $45 billion of premium and 30% growth creating $109 billion of US cyber premium.

Companies spend more on cybersecurity but struggle to track expenses

Optiv | 2024 Cybersecurity Threat and Risk Management Report | July 2024

• Only 29% of respondents say their organizations have cybersecurity insurance.
• 49% of respondents say they plan to purchase cybersecurity insurance in the next six months (23%) or in the next year (25%).
• 52% of respondents say it is highly difficult to purchase cybersecurity insurance because of the insurer’s requirements.

26% of organizations lack any form of IT security training

Hornetsecurity | Company IT Security Awareness | June 2024

• 56% of the surveyed organizations now use cyber-insurance, indicating a growing reliance on financial safeguards against cyber incidents.

Cyber insurance isn’t the answer for ransom payments

Veeam | 2024 Ransomware Trends Report | June 2024

• Despite only a minority of organizations possessing a policy to pay, 81% opted to do so.
• 65% paid with insurance and another 21% had insurance but chose to pay without making a claim. This implies that in 2023, 86% of organizations had insurance coverage that could have been utilized for a cyber event.
• Only 62% of the overall impact is in some way reclaimable through insurance or other means, with everything else going against the organization’s bottom-dollar budget.

Human error still perceived as the Achilles’ heel of cybersecurity

Proofpoint | Voice of the CISO Report | May 2024

• 79% of CISOs said they would rely on cyber insurance claims to recover potential losses incurred, compared to 61% in 2023.

Ransomware fallout: 94% experience downtime, 40% face work stoppage

Arctic Wolf | 2024 Arctic Wolf Trends Report | May 2024

• Cyber insurance demand and adoption is widespread, with an exceedingly small fraction (5%) of organizations deciding not to acquire coverage. Of the remaining organizations surveyed, 66% have an active cyber insurance policy, while 29% are in the process of obtaining or planning to obtain a policy this year.
• 53% of survey respondents were most concerned with rising premiums and stricter requirements for maintaining coverage.
• 94% of organizations either currently have or plan to implement adoption and usage policies around generative AI and large language models (LLM) tools this year.

56% of cyber insurance claims originate in the email inbox

Coalition | 2024 Cyber Claims Report | April 2024

• 56% of all 2023 claims were a result of funds transfer fraud (FTF) or business email compromise (BEC), highlighting the importance of email security as a critical aspect of cyber risk management.
• Overall claims frequency increased 13% year-over-year (YoY), and overall claims severity increased 10% YoY, resulting in an average loss of $100,000.
• Claims frequency increased across all revenue bands, with businesses between $25 million and $100 million in revenue seeing the sharpest spike (a 32% YoY increase).