The identity theft insurance market has gained prominence in response to the increasing concern surrounding identity theft in the digital age. Identity theft refers to the unauthorized use of personal information, leading to financial and reputational damage. To address these risks, individuals and businesses have turned to identity theft insurance for protection.
The market for identity theft insurance can be segmented based on the types of identity theft covered. One such segment is financial identity theft, which involves unauthorized access to an individual's financial accounts, resulting in fraudulent transactions and significant financial losses. Another segment is tax and employment identity theft, where someone uses another person's identity for fraudulent tax filings or to gain unauthorized employment benefits.
Medical identity theft is another important segment, wherein someone fraudulently uses another person's identity to receive medical services, prescription drugs, or file fraudulent insurance claims. Additionally, there are other types of identity theft that may not fall into these specific categories, such as identity theft related to social media accounts or online shopping.
Identity theft insurance can also be segmented based on its application. The individual application segment focuses on providing coverage for individuals, protecting their personal information and finances. Policies can be customized to individual needs, offering services such as identity restoration, financial loss reimbursement, and legal support in the event of identity theft.
The business application segment of identity theft insurance caters to the protection needs of organizations. It provides coverage against identity theft incidents targeting businesses, including cases where employee or customer data is compromised. This insurance helps businesses mitigate financial losses, address legal liabilities, and protect their reputation.
Key Drivers of the Identity Theft Insurance Market
Rising Incidences of Identity Theft
The prevalence of identity theft incidents continues to increase, driven by advancements in technology and cybercriminal activities. High-profile data breaches, phishing scams, and online fraud incidents have raised concerns about the security of personal information. For instance, Sumsub, the global verification platform offering customizable KYC, KYB, transaction monitoring, and AML solutions, released fraud statistics for North America in Q1 2023. The data, based on information collected from the US and Canada, highlights the top fraud types and industries affected. In the US, identity document forgery accounted for 17% of fraud, while Canada's top three fraud types remained unchanged. The most impacted industries were IT services, classifieds, and crypto in the US, with online media fraud doubling in Q1 2023. Sumsub also identified emerging trends, including forced verification and the increasing prevalence of deepfakes, emphasizing the need for robust verification and anti-fraud measures. From 2022 to Q1 2023, the proportion of deepfakes in North America more than doubled. This share increased from 0.2% to 2.6% in the US and from 0.1% to 4.6% in Canada.
Technological Advancements and Digital Transformation
The rapid pace of technological advancements and the widespread adoption of digital platforms have expanded the attack surface for identity theft. Mobile banking, eCommerce, and online transactions have made personal information more vulnerable. As individuals and businesses embrace digital transformation, they recognize the need for comprehensive protection, leading to increased demand for identity theft insurance.
Expansions and Innovations by Major Market Players
The identity theft insurance market has significant contributors such as American International Group (AIG), Nationwide Mutual Insurance Co., Experian, Geico, and others. These players assist in the market’s growth with the launch of new products and through collaborations and investments. Some of the recent developments in the market include-
• In May 2023, Insurtech company BOXX Insurance launched MyCyberProtection by Cyberboxx HomeSM in the USA, providing an all-in-one solution for comprehensive cyber insurance, security tools, and emergency assistance to protect Americans from online risks. The product addresses the rising cyber threats driven by increased digitization and dependency on online services. With coverage for computer attacks, cyber ransom, online fraud, and more, individuals and families can safeguard themselves against common risks, including identity theft. BOXX Insurance's platform also allows brokers to offer branded cyber insurance policies to their clients, enhancing accessibility and convenience.
• In August 2022, Raghnall Insurance Brokers launched an integrated platform called "Individual Cyber Insurance" in India to protect individuals from cyber threats. The platform offers coverage for digital theft, cyberbullying, identity theft, data restoration, and more. It also includes a "Cyber Theft Scanner" tool to check if personal data has been breached. Raghnall plans to introduce a similar platform for MSMEs and small corporates as well.