Rising cybersecurity threats are a source of profit for insurtech businesses

Insurance firms can evaluate and underwrite their customers' cyber risk with the assistance of cybersecurity startups and insurtech startups that provide cyber insurance. A number of the players in the market, including Onsurity, Plum, InsuranceDekho, Safe Security, Policybazaar, and BimaKavach, are in competition with more established firms. The entrepreneurs assert that they are seeing a fundamental change in how businesses view cyber risk insurance. They now acknowledge it as being a crucial part of strategic risk management.

According to a Deloitte market report, India’s cyber insurance market is currently valued at $50-60 million, poised to grow at a staggering compound annual growth rate (CAGR) of 27-30% in the next 3-5 years. Further, the global cost of cybercrime is also expected to increase from $9.22 trillion in 2024 to $13.82 trillion by 2028, according to a report by Statista.

“With India at the forefront of technology-led growth, cyber crimes will continue to increase,” Pankaj Goyal, COO and Cyber Insurance Lead at Safe Security. He added that we also have new regulations today that impose fines on organisations that fail to maintain compliance, which further encourages companies to purchase cyber insurance.

Experts say that today many companies are allocating a budget for both cybersecurity and cyber insurance. Typically in evolved ecosystems such as the US, cybersecurity and insurance spend is between 2% and 8% of a company’s IT spend.

In India, industries heavily involved in digitisation, such as IT, pharma and manufacturing, seem to be the early adopters of cyber insurance, delegating a similar budget. However, no business is too small for cyberattacks and thus insurtech startups are introducing the idea of cyber insurance to SMEs and MSMEs as well. “Small companies that utilise technology are often more susceptible due to limited resources for robust cybersecurity measures,” Yogesh Agarwal, founder and CEO, Onsurity, said. In October last year, Onsurity raised $24 million in Series B funding from International Finance Corporation, Nexus Venture Partners, and Quona Capital.

Insurtech startup InsuranceDekho, which introduced cyber insurance in August 2023 to address the growing digital risks faced by MSMEs and large corporations, however, feels that many businesses are yet to understand the potential impact of cyber incidents on their operations and finances, leading to hesitancy in opting for cyber insurance. “Despite these challenges, we remain committed to raising awareness about cyber risks and the benefits of cyber insurance,” Sharad Bajaj, COO, InsuranceDekho said.