Oleg Parashchak · Follow
Published in · 5 min read · Apr 12, 2024
Showing significant growth potential, the market is driven by the awareness of the increasing frequency and sophistication of cyber-attacks, including the potential financial repercussions, as well as by stricter regulatory requirements, such as the Network and Information Security Directive (NIS2) taking effect in October 2024.
NIS2 is a key development in elevating European cybersecurity and resilience to higher levels.
The global cyber insurance market has reached a size of $14bn in 2023 and is estimated by Munich Re to increase to around $29bn by 2027
Further growth factors continue to be the ongoing digital transformation and technological advances in all sectors and concrete requirements to be satisfied by business partners within the supply chain.
This overall trend illustrates the importance of cyber insurance as a core component of cybersecurity risk management.
Over the past 5 years, the cyber insurance market has nearly tripled in size, thanks in part to robust support from reinsurers and modest interest from capital markets in cyber risks.
Despite this growth, the industry has insured only a small portion of potential risks. Large corporations continue to dominate premium payments, while small and medium-sized enterprises largely manage their cyber risks independently, according to Beinsure’s Cybercrime Predictions for 2024–2025.
Insurers encounter significant challenges in attempting to bridge the gap between economic and insured losses, exacerbated by the rapidly increasing prevalence and complexity of cyber risks.
While past trends may not reliably predict the future, analyzing historical attack patterns, vulnerabilities, and losses is vital for enhancing future cyber preparedness. It is crucial to prepare for the significant impacts of potential threats at all levels, ranging from individuals and businesses to national governments.
Artificial intelligence is widely expected to power future ransomware attacks, with automated attack processes, more convincing phishing, and faster malware development. However, it could also enhance cyber security, with more effective and faster detection and threat intelligence.
Threat actors are already using AI-powered language models like ChatGPT to write code.
AI can be used to carry ore automated attacks, as well as develop new techniques to steal or poison data.
When you think about the potential to combine AI with the proliferation of the IoT and the speed of 5G, for example, we may have a serious issue on the horizon.
With the launch of ChatGPT, large language models (LLMs) and generative artificial intelligence have become mainstream. However, the era of (generative) AI has only just started, and its long-term impact on economies, societies and geopolitics remains difficult to predict.
AI will almost certainly be deployed by state and commercial actors in multiple domains. In terms of AI’s impact on cybersecurity, Munich Re experts expect cyberattacks to become increasingly automated and personalized, as well as cheaper and faster to distribute at scale in all languages.
AI capabilities will also increasingly augment the efforts of cyber defenders. AI and related technologies can be utilized to specifically strengthen detection and response capabilities and to improve attribution of cyber-attacks to adversaries by mapping their techniques, tactics and procedures.
While initial steps, such as the EU Artificial Intelligence Act, are being taken, more state-driven efforts will follow in the field of AI governance and regulation.
In the insurance sector, AI will almost certainly be widely deployed along the entire value chain:
- Enhanced risk assessment — e.g. by virtual agents that may support or undertake exposure quantification or cybersecurity recommendations
- More efficient, customized and responsive offerings with optimized and actively risk-based coverage creation
- Improved incidence monitoring and responses as well as faster claims processing
- Increased awareness on cybersecurity and risk management solutions offerings to further increase resilience
- Streamlining of operations, fostering of relationships with clients and intermediaries / broker and efficiency in underwriting processes and sales
- Advanced data analytics, telematics & predictive modelling
Despite these very promising use cases and developments, AI cannot replace the expertise and knowledge required for excellent understanding and underwriting of cyber risk at present.
According to Future of Global Cyber Insurance Market, malicious state-driven attacks are increasingly targeting the disruption of elections through propaganda and manipulation to undermine their integrity.
The 2024 US presidential elections headline over 40 major global elections, affecting more than 4 bn eligible voters in regions including the EU, India, South Korea, Indonesia, and Mexico.
Democracies face significant challenges in countering disinformation, exposing fake content, and securing the digital aspects of electoral processes.
The rise in nation-state cyber activities and attacks poses a serious threat to cybersecurity globally. There is a very real danger that the opportunities offered by Gen AI and LLMs will also be exploited by nation-states, particularly in the area of disinformation and information warfare to undermine democracy.
The potential social, economic and geopolitical impact could be enormous, as the lines between the physical and virtual worlds, and between truth and fakery, become even more blurred.
Nation-state activities are expanding to include not only sophisticated disinformation campaigns and election interference but also economic, military, and political espionage.
Often, nation-states either actively support or tolerate cybercriminals. These adversaries are enhancing their capabilities with standard tools like destructive wiper attacks that irreversibly delete or damage system data.
There is a growing investment in exploring zero-day vulnerabilities, which attackers exploit before patches become available, allowing them to conduct potent cyber operations undetected.
The development of advanced large language models by nation-states may sometimes aim to create specific malware, enhancing their cyber warfare arsenals.
These developments underline the critical need for robust cyber defense mechanisms to protect against and mitigate these sophisticated threats.
Due to increasing global competition in and heavy reliance on space, satellite and communication security, this sector will be a crucial factor in all cyber security considerations — both for nation-states and large commercial satellite operators.
95% of defense and aerospace decision makers agree that ongoing digitalization has led to a more dynamic and complex battlefield (BAE Systems).
………………..
FULL Report — https://beinsure.com/cyber-risk-insurance-market-trends/
