Cyber insurance premiums will grow at a faster pace worldwide than any other type of coverage, an indication that companies are placing greater value on intangible assets such as cyber and intellectual property, according to a new study.
Over the past five years, cyber premiums have grown at 23 percent annually and by 2021 will be worth some $4 billion, a compound annual growth rate of 14.1 percent, Aon, a London-based professional services firm, said. The figures were drawn from a series of global studies conducted by Aon's Inpoint research arm investigating insurance purchased by corporate, public sector and not-for-profit organizations between 2013 and 2017 and projecting trends into 2021.
An earlier study by Willis Towers Watson, a risk management, insurance brokerage and advisory company, concluded that total annual cyber premiums could reach $10 billion by 2020.
Despite the impressive growth expectations, cyber insurance premiums are tiny compared to industry workhorse global commercial property/casualty premiums, which were worth about $730 billion in 2017 and by 2021 will rise to almost $900 billion, the Aon studies showed. Within this total, U.S. commercial property/casualty (P&C) insurance premiums were worth $274.5 billion in 2017 and are forecast to rise to $331.5 billion in 2021.
Among vertical industries, manufacturing generated the highest premiums worldwide in 2017 at roughly $111 billion, followed by agriculture, fishing and forestry at $72 billion. Aon projected that manufacturing will remain strong but premiums bought by financial institutions, the mining and minerals sector, and technology and media firms each are expected to clip along at a faster growth rate of about six percent through 2021.
Here’s some additional data from Aon’s studies, useful for comparing to cybersecurity insurance:
- Premiums for commercial auto insurance worldwide grew the fastest from 2013-2017 reaching $192 billion in 2017.
- Globally, workers’ compensation premiums stood at $83 billion, mainly due to their vast size in the U.S., having increased from $71 billion in 2013.
- Roughly $97 billion of the global commercial lines market is bought by micro enterprises, comprised of self-employed individuals and entities with up to nine employees.
“There are multiple reasons for the increased focus and increased premiums ranging from financial statement protection due to a business interruption to the constantly evolving global regulatory environment including the European Union’s General Data Protection Regulation,” said Michael Moran, Aon Inpoint CEO.
Here’s some of our prior coverage of the cyber insurance market:
- Coalition, a California-based cyber insurance provider, is offering coverage up to $10 million for businesses across the real estate industry.
- Warren Buffett, the venerable billionaire investor and CEO of conglomerate Berkshire Hathaway, believes cybersecurity risk for insurance underwriters can only get worse.
- Cyber insurance is a key component of an organization’s cybersecurity and IT risk management strategy, according to the Federal Financial Institutions Examination Council.
- 82 percent of small businesses have purchased cybersecurity and data privacy risk insurance for protection against financial loss, according to USI, an insurance brokerage and consulting firm.