Singapore's cyber insurance industry is expected to expand by 50 percent this year, with healthcare and finance among the top growing sectors.
Demand would be fuelled by businesses looking to mitigate potential damage from cybersecurity breaches on reputation and finances, said AIG Asia-Pacific Insurance, which based its findings on research conducted at the company's corporate governance events in late-2014. Respondents included CFOs, risk managers, and general counsel from public-listed companies, said the financial services provider.
It added that Singapore's goal to become a smart nation would further increase interconnectivity and automation across the nation, hence, drive threats of cyberattacks and corporate sabotage.
AIG Singapore's head of financial lines, Lai Yen Yen, said: "While cyberattacks grow in size, volume, and sophistication, defensive methods and technologies have not seen a corresponding evolution, potentially costing businesses millions in the event of a cyber breach."
She noted a seven-old increase in inquiries from companies in the country about cyber insurance policies, but gave no specific details on the number of companies or how much revenue would be generated as a result of the market demand.
Lai said less than an estimated 10 percent of businesses in Singapore currently were covered by cyber insurance. By 2020, this figure could climb to 40 percent, she said.
Market demand was forecast to come from the finance and technology sectors as well as healthcare, with security risks coming from the lack of data encryption, increased malware, and outsourcing to third-party vendors.
"Not only do data leaks result in financial losses including compensation payouts and regulatory investigation, but damage to reputation and loss of consumer confidence also can have a long-term impact on a company's bottom line," said Lai.
"The profound impact of a cyberattack means risks of this nature are starting to rank in the top three exposures of any business, regardless of the industry or size," she added, pointing to AIG 2014 research that revealed 42 percent of companies were anxious about reputation damage and 33 percent were concerned about financial losses.
Research further revealed that while two-thirds of public-listed companies in Asia said cyber insurance was increasingly important, just 9 percent had such coverage, according to AIG.