Problem: Cyberspace is the new ground for warfare and corporate espionage. And 2020 was ripe for cyberattacks globally. As reported by TechJury,
Globally, 30,000 websites are hacked daily.
64% of companies worldwide have experienced at least one form of a cyber attack.
With every passing second, 75 records go missing worldwide.
In Q2 2019, ransomware attacks peaked with a 363% YoY growth.
Around 94% of all malware is spread through email.
Every 39 seconds, there is a new attack somewhere on the web.
An average of around 24,000 malicious mobile apps are blocked daily on the internet.
Moreover, the cybersecurity market is huge. According to GrandView Research, the global cyber security market size was valued at $167.13 billion in 2020 and is expected to register a CAGR of 10.9% from 2021 to 2028.
It makes sense to spend billions on prevention, especially given the prevalence of attacks; however, the flipside of such markets often is insurance. Is there an opportunity for post-attack innovation in cyberspace?
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Solution: This business would allow businesses to pay into a fund in order to buy into cybersecurity insurance the same way that consumers buy home/auto/life insurance and businesses buy Directors/Officers/Liabilities insurance. For business owners, if they can prove that they were hacked in an event of cyber-espionage, cyberwarfare, or cyber-antagonism then this business would both offer cash payouts to mitigate the disruptions while also offering resources of highly-trained for-hire cyber experts to fix the issue as soon as possible. One of the crux’s of this business would be the data and inference algorithms that the company would use to assess cyber payouts, damages, and response. With the abundance and inevitability of cyber attacks, cyber insurance seems like a no brainer business that can easily become a billion-dollar industry.
The market already has some traction and a few major players. Namely, Chubb (four cyber policies available to business owners through the Chubb suite), Liberty Mutual (offers “Data Compromise and CyberOne” endorsements to its small business owner customers BOP policy), CNA (offers a cyber liability (data breach liability) policy to business owners called CNA NetProtect 360® for first- and third-party liability claims associated with e-business and Internet networks), Travelers (resources for policy holders include cyber coaches, Travelers eRisk Hub and Travelers Cyber Academy), and AIG (cyber liability coverage to business owners as well as preventative services to help improve cyber security and prevent incidents). Most recently, I also stumbled across Coalition – Cyber Risk, Solved. (coalitioninc.com). All of these businesses are fascinating, but there is room for growth in each.
As described by Allied Global Research in reference to the cyber-insurance industry specifically, “the global cyber insurance market size was valued at $4.8 billion in 2018 and is projected to reach $28 billion by 2026, growing at a CAGR of 24.9% from 2019 to 2026.” They continued by writing to describe what cyber insurance is.
Cyber insurance is designed to help an organization with cyber-related security breach or similar events. It provides coverages related to first parties as well as claims by third parties, in order to mitigate risk exposure by offsetting costs involved with recovery of internet-based cyber losses. It typically includes losses from network security breaches, loss of privacy, indemnification from lawsuits related to data breaches, and others. These attacks have escalated in terms of intensity and frequency, posing a threat to individuals, organizations, and countries, which have been driving the adoption of cyber insurance solutions. Cyber-attacks have an adverse impact on businesses such as declining customer base, disruption of business, regulatory fines, legal penalties & attorney fees, loss of intellectual property, and reputational damage.
I stumbled upon this industry while researching and writing a paper on Cybersecurity in Latvia which will hopefully be published as part of a NATO Science and Technology project. In doing this research, I realized just how vulnerable smaller nations are to cyber attacks and other cyber intrusions. Could insurance be an effective deterrent or response in a world where land-size and army-size are no longer metrics of geo-political strength? This business would be a direct answer to that question.
Monetization: Sales of policies and revenue from premiums.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)