Other parts of this series:
- Cyber insurance – the third wave is here
- Cyber insurance: three ways to reduce carrier risk
- Cyber threats: the IoT security gap—an opportunity for insurance
- Markets offering the largest cyber security insurance opportunity
- The new shape of cyber security insurance—meeting evolving threats head on
- Cyber security – the threat that insurers face
Despite a lack of understanding of cyber security risk and exposures and, among customers, of coverages, demand in certain sectors and geographies is clear. Let’s take a look at those.
This is the fourth post in my cyber security series, which explores the growth and evolution of cyber threats, and the opportunity for insurers.
Cyber insurance for specific sectors—autonomous vehicles
Researchers are predicting that adoption of autonomous vehicles will begin in 2020. By 2050, Intel estimates, the global passenger economy will be worth $7 trillion. For hackers, using a computer to hijack the systems of an autonomous vehicle, or even to steal the vehicle, is not too difficult. An Accenture study predicts that cyber security, product liability and public infrastructure insurance for autonomous vehicles could reach $81 billion by 2025.
New product opportunities in auto insurance
Cyber security insurance will be the greatest driver of new premiums in the auto insurance segment, totaling $64 billion by 2025, followed by product liability insurance ($14 billion) and public infrastructure insurance ($3 billion).
The opportunities include protecting against vehicle theft, unauthorized vehicle entry, and the use of “ransomware” to hold vehicles hostage until payments are made to unlock software controls. With connected cars, insurers will offer protection against identity theft, privacy invasion, and the theft or misuse of personal information.
Governments are very aware of this growing threat. New guidance from the UK government, Principles of cyber security for connected and automated vehicles, makes its expectations clear.
Looking at the drivers for cyber insurance across economies and geographies offers insurers another perspective of growing demand.
The opportunity to sell cyber insurance in various geographies
According to Allied Market Research, there is growing demand for cyber security insurance globally.
- North America is the leading cyber security revenue contributor. It accounted for 87 percent of the overall cyber insurance market in 2015 and will continue its dominance through 2020. Despite this, a recent study of US executives by FICO and Ovum indicates that 50 percent of US firms have no cyber security insurance, compared to 40 percent in other countries surveyed.
- Europe has less penetration of cyber insurance liability policies, but with the European Council’s General Data Protection Regulation scheduled to go into effect in 2018, demand for coverage is expected to grow.
- Asia Pacific is rapidly emerging as a potential market for cyber security solution providers, driven by emerging economies such as China, India and South-East Asian countries. The region, with Korea heading the list, is considered the top target for cyber attacks due to generally weak protection. AIG reports that following the global WannaCry infection, requests for its cyber insurance policies in Asia have jumped by 87 percent compared to the same period last year. This reflects the region’s rush to make up for its previous lack of cyber threat awareness.
- India should see huge cyber security market growth over the next decade as the country establishes an ecosystem to promote the growth of indigenous security products and services.
But with this opportunity comes challenges.
Cyber security insurance is a new, immature sector and both insurers and their customers are struggling to understand the risks and define them. Nonetheless, a number of insurance companies are leading the way with innovative solutions.
Look for my next post—The new shape of cyber security insurance—meeting evolving threats head on—for a look at how insurers and the buyers of cyber security insurance are impacted by uncertainty in this sector; and how insurance leaders are responding.