Content analysis of cyber insurance policies: how do carriers price cyber risk?

Romanosky, Sasha; Ablon, Lillian; Kuehn, Andreas; Jones, Therese

doi:10.1093/cybsec/tyz002

Cited by 113 publications

(110 citation statements)

References 9 publications

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“…All policies generally distinguish between first and third party (liability) losses ( [70]). A systematic qualitative analysis of cyber insurance policies across the US ( [70]) found a surprisingly strong similarity regarding covered losses, where the ten most commonly covered losses included costs of claims expenses (including legal expenses from penalties, defense, and settlement costs), public relations services, costs of notification of affected individuals (e.g. data breach victims), business income loss, data or system restoration, forensic investigation costs, and data extortion expense.…”

Section: Cyber Insurance Policies: Coverage and Exclusionsmentioning

confidence: 99%

“…Despite these challenges, especially in the US an existing market is already established; including underwriters, brokers, and organisations specialized on cyber data analytics ( [8]). Concerning the pricing of cyber risk, however, a surprising finding was published by [70]: They systematically analysed cyber policies across the US and found that the main themes used for pricing included looking to competitors and estimation/guesswork. The ad-hoc nature of cyber policy pricing confirms that a unified quantitative understanding of this new type of risk and its underlying drivers is still at its infancy.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

A Comprehensive Model for Cyber Risk Based on Marked Point Processes and Its Application to Insurance

Zeller

Scherer

2020

SSRN Journal

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Section: Cyber Insurance Policies: Coverage and Exclusionsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

A Comprehensive Model for Cyber Risk Based on Marked Point Processes and Its Application to Insurance

Zeller

Scherer

2020

SSRN Journal

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“…Cyber insurers, working in a fast-developing market, instead rely on a number of indirect factors to try to price policies appropriately, including market estimates of the cost of cyberattacks, questionnaires to determine the riskiness of the insured, their own (often limited) underwriting experience, and pricing by other insurance companies. 4 Current cyber protection comes in three forms: third-party written coverage, first-party written coverage, and implicit silent cyber coverage.…”

Section: Challenges Of Writing Cyber Insurancementioning

confidence: 99%

The growth and challenges of cyber insurance

Granato¹,

Polácek²

2019

CFL

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Cyberattacks have grown in frequency and cost over the past decade, with high-profile cases, such as the 2013 Target data breach, the 2017 Equifax data breach, and the leak of Democratic National Committee emails during the 2016 election making national headlines. Ransomware attacks, intellectual property theft, and fraud cost companies billions in recovery expenses, fines, and lost revenues every year. More firms are purchasing cyber insurance as a way to cover losses and expenses resulting from cyber incidents. However, cyber insurance alone is not a panacea, and even firms that have cyber insurance may not be as protected as they think. Unlike traditional lines of business such as private auto insurance, where standardized policies provide liability or collision coverage, cyber insurance policy language is not standardized. The types of risks covered under cyber insurance vary significantly across policies and businesses, and insurers do not always agree on what loss events are covered under those policies. The features of cyber events, including a limited loss history, the unreliability of past data when predicting future events, and the possibility of a large-scale attack where losses are highly correlated across companies and/or industries, make it difficult to write comprehensive policies. In this Chicago Fed Letter, we examine the extent to which cyber insurance can help protect businesses and the wider economy from the costs of cyberattacks and how institutional factors and legal uncertainties may obstruct the development of this market. What is cyber insurance? Most observers trace the history of cyber insurance back to Steven Haase, who helped AIG write the first internet security liability policy in the spring of 1997. The first cyber insurance policies were geared toward information technology companies responsible for managing networks and systems used by other businesses and consumers. But the cyber insurance market has since expanded, and current cyber protection comes in three forms: third-party written coverage, first-party written coverage, and implicit silent cyber coverage (sometimes called nonaffirmative cyber exposure). We define and discuss each of these in turn. Third-party liability cyber insurance reimburses said entities for the costs incurred by their clients because of data breaches, malware infections, or other cyberattacks in which the insured entity was at fault. Third-party liability coverage is the cyber equivalent of medical malpractice, where businesses are insured against harm they inflict on their clients by their action (or, as is usually the case with cyber risk, inaction). Many early policies were of this form. Even firms that have cyber insurance may not be as protected as they think.

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“…The substantial new revenue opportunities arising from the cyber insurance need to be complemented by large cost savings [11], [12]. Also, insurance will need to introduce more accurate risk assessments, behavior-based insurance contracts and dynamic pricing, and handle diverse consumer technology and frequent regulatory changes driven by new compliance challenges.…”

Section: Introductionmentioning

confidence: 99%

“…Also, insurance will need to introduce more accurate risk assessments, behavior-based insurance contracts and dynamic pricing, and handle diverse consumer technology and frequent regulatory changes driven by new compliance challenges. These trends require more dynamic and automated creation, management and adaptation of cyber insurance policies, including dynamic risk assessment and dynamic pricing [12]. In addition, the costs of acquiring customers can be reduced by the use of analytics and increased insurance customization to the characteristics of the subject of insurance.…”

Section: Introductionmentioning

confidence: 99%

Cyber Insurance of Information Systems: Security and Privacy Cyber Insurance Contracts for ICT and Helathcare Organizations

Hatzivasilis

Chatziadam

Petroulakis

et al. 2019

2019 IEEE 24th International Workshop on Computer Aided Modeling and Design of Communication Links and Networks (CAMAD)

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Nowadays, more-and-more aspects of our daily activities are digitalized. Data and assets in the cyber-space, both for individuals and organizations, must be safeguarded. Thus, the insurance sector must face the challenge of digital transformation in the 5G era with the right set of tools. In this paper, we present CyberSure-an insurance framework for information systems. CyberSure investigates the interplay between certification, risk management, and insurance of cyber processes. It promotes continuous monitoring as the new building block for cyber insurance in order to overcome the current obstacles of identifying in real-time contractual violations by the insured party and receiving early warning notifications prior the violation. Lightweight monitoring modules capture the status of the operating components and send data to the CyberSure backend system which performs the core decision making. Therefore, an insured system is certified dynamically, with the risk and insurance perspectives being evaluated at runtime as the system operation evolves. As new data become available, the risk management and the insurance policies are adjusted and fine-tuned. When an incident occurs, the insurance company possesses adequate information to assess the situation fast, estimate accurately the level of a potential loss, and decrease the required period for compensating the insured customer. The framework is applied in the ICT and healthcare domains, assessing the system of medium-size organizations. GDPR implications are also considered with the overall setting being effective and scalable.

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Content analysis of cyber insurance policies: how do carriers price cyber risk?

Cited by 113 publications

References 9 publications

A Comprehensive Model for Cyber Risk Based on Marked Point Processes and Its Application to Insurance

A Comprehensive Model for Cyber Risk Based on Marked Point Processes and Its Application to Insurance

The growth and challenges of cyber insurance

Cyber Insurance of Information Systems: Security and Privacy Cyber Insurance Contracts for ICT and Helathcare Organizations

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