Why Is Cyber Insurance One of the Industry’s Fastest Growing Sectors?
When most people think “insurance,” they probably think of the usual staples of consumer-grade insurance: life, health, disability, etc. The insurance industry is much bigger than just those types of coverage, however, and one sector of the industry in particular has become one of the fastest growing types of insurance plans. This type of insurance is cyber liability insurance, often called cyber insurance for short, and within the next four years it is expected to see a dramatic increase in value.
What Is Cyber Insurance?
Cyber insurance is a type of business insurance that covers the expenses related to data breaches, hacking, and other cybercrime. As high profile hacking cases at organizations such as Sony, Target, and even the federal government have shown, enterprises in the 21st century face a very real threat of sensitive data becoming compromised or stolen electronically. When such incidents happen, the affected businesses face potentially devastating losses in the form of fines, lost business, and legal fees. Cyber insurance protects businesses from those costs.
How Much Has Cyber Insurance Grown?
The sale of cyber insurance has grown astronomically over the last few years, and will likely continue to do so in the years to come. While cyber insurance has been around for at least 10 years, the number of premiums written every year increased dramatically in 2013, the year of the massive data breach involving Target’s customer data. According to the PwC Global State of Information Security Survey 2016:
• In 2013, the sale of cyber insurance premiums was worth $1-2 billion.
• The value of cyber insurance premiums written in 2015 was $2.5 billion
• In 2016, that number is expected to reach $3 billion.
• By 2020, the value of cyber insurance premiums that year are projected to be worth $7.5 billion.
According to a 2014 study, cyber crime costs the global economy $445 billion per year. Because of the difficulty preventing the most determined phishers, hackers, and other cyber criminals, businesses can often only play catch up to criminals’ latest attack methods. Unfortunately, that means that there is no way for most organizations to reduce the chance that they will be a victim of a cyber-attack to zero. As such, cyber insurance is seen as an essential tool for many businesses, especially those that store sensitive financial or personal data. Customers are beginning to expect that businesses carry cyber liability insurance, as well. To many consumers, businesses that don’t have cyber insurance are ill-prepared to deal with a very real threat, and are likely to lose business to those companies that do have the proper coverage.
How Insurance Agents Can Benefit
Given that the sales of cyber liability insurance is projected to grow exponentially in the next four years, it should present plenty of opportunities for enterprising insurance agents to make a tidy living. As the demand for cyber insurance policies grows, so will the demand for insurance agents who are licensed to sell it. For insurance agents who already specialize in business insurance or new agents looking for a field to specialize in, cyber insurance sales may be too good an opportunity to pass up.
Want to start selling cyber insurance? You need to get licensed first! America’s Professor offers convenient online insurance exam prep classes. Learn more by calling 800-870-3130 today.
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