The Banking, Financial Services, and Insurance (BFSI) sector continues to lead India’s cyber insurance market, making up 35% to 40% of policyholders, according to a recent report by Policybazaar For Business. The technology and IT sector follows closely behind with a 30% share, underscoring the growing importance of cyber insurance in protecting businesses against increasing digital threats.
The report reveals that nearly all clients renewing their cyber insurance policies, a trend fueled by escalating cyber risks and stringent regulatory requirements, are contributing to the sustained growth of the sector. Evaa Saiwal, Head of Liability Insurance at Policybazaar For Business, noted that this surge in demand is expected to continue, extending beyond large enterprises to small and medium-sized businesses (SMEs) and emerging industries.
A key finding of the study is the 100% renewal rate for businesses with an annual turnover exceeding ₹10 crore, highlighting their increasing reliance on cyber insurance. Startups account for 25% of adopters, while the healthcare and logistics sectors each hold a 5% share.
The high adoption rate among BFSI and technology companies is primarily attributed to stringent regulatory requirements and heightened vulnerability to cyber threats. These sectors are more exposed to cyber risks due to the sensitive nature of the data they handle, making robust insurance coverage essential.
The study also highlights that 30% to 35% of cyber insurance clients are first-time buyers, signaling a shift towards more proactive cyber risk management. Many mid-sized enterprises and startups, which had previously underestimated the financial and operational impact of cyberattacks, are now recognizing the necessity of cyber insurance to safeguard their operations.
Business interruptions caused by data breaches account for 45% of all cyber insurance claims, making it the leading cause of payouts. Social engineering attacks follow, contributing to 25% of claims, while ransomware incidents account for 20%, and other types of cyber threats make up the remaining 10%. This trend underscores the critical role of cyber insurance in mitigating the impact of operational downtime and ensuring business continuity during cyber incidents.
The market for cyber insurance has seen significant growth over the past two years, driven by both regulatory compliance and a heightened focus on risk assessments. Changes in data protection and cybersecurity regulations have led more businesses to seek coverage, while companies in the BFSI and IT sectors are increasingly requiring their vendors and partners to maintain cyber insurance as part of contractual agreements.
As cyber threats continue to evolve, the adoption of cyber insurance is set to rise, helping businesses better manage the financial and operational risks associated with an increasingly digital world.
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