Increasing number of cyber threats is to result in growth of cyber risk insurance market

Data thefts and damaging of businesses via information technology has become a common crime these days. Cybercrimes like hacker attack, malicious software and DDos attacks are a real danger in the context of global IT development, and it is getting harder to combat them.

Injuries to reputation, violations of internal and external business processes, and payment of damages to clients for the leakage of their data are the main losses of a company from cyberattacks. Cyber risk insurance is not a substitute for data security measures, but it may become the only way to minimize losses.

According to Allied Market Research, a British analytical center, the volume of cyber risk insurance market will reach 14 billion US dollars, and by 2025, it will amount to 20 billion US dollars (according to Allianz, a German insurance company). The USA is the leader in cyber insurance with its domestic market of 1.35 billion US dollars, which is quite natural for the major part of cybercrimes accrues to the USA.

Market volume of cyber risk insurance in Russia is around 15 million US dollars. Demand for this type of insurance has just started to develop: a small number of contracts have been concluded, and most of them have been executed by subsidiaries of foreign insurance companies. Total cyber insurance amount of AlfaStrakhovanie company is 100 million euros. There are over 20 largest Russian business entities among its corporate customers. The first company to protect itself from cyber risks was MTS, a mobile network operator, followed by VimpelCom. Ingosstrakh and Liberty Insurance have started to conclude insurance contracts.

By 2022, a large-scale cyber risk insurance market is going to be created under the government-run program Digital Economy, and insurance premiums are to reach 20 million US dollars. Sberbank will chair the working group. The Ministry of Finance, Central Bank, Federal Security Service and All-Russian Union of Insurers are to assist achieving the goal.

Procedure of cyberattack protection is to become compulsory for a number of sectors and public bodies, such as banks, military and industrial enterprises and tax service. This project is to result in amendments of the Federal Law “On organization of insurance”, and introduction of a new type of service – cyber risk insurance.