Cyber insurance insurance policies enter 21st century

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Cyber-insurance: Insurance policies enter the 21st century

Cyber-insurance policies help businesses combat the sharp increase in cybersecurity attacks.

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Quantumrun Foresight
November 30, 2021

The surge in cyberattacks has led to a growing concern among individuals and businesses, prompting the rise of cyber insurance. As the threat landscape evolves, the role of cyber insurance is shifting from a reactive to a proactive stance, with insurers helping clients enhance their cybersecurity measures. This shift is fostering a culture of shared responsibility, potentially leading to safer online practices, stimulating technological innovation, and prompting new legislation for a more secure digital environment.

Cyber-insurance context

According to a 2021 US Federal Bureau of Investigation, since 2016, more than 4,000 ransomware assaults have taken place in the United States. That's a 300 percent increase over 2015 when ~1,000 ransomware assaults were reported. Malware, identity theft, data theft, fraud, and online bullying are all examples of cyberattacks. In addition to apparent financial losses such as paying a ransom or having a criminal run up someone’s credit card account, business owners may suffer even more debilitating financial implications.

Meanwhile, for general consumers, according to a 2019 poll by Verisk, a data analytics organization, over two-thirds of those surveyed are concerned about a cyberattack, and roughly one-third have previously been a victim.

As a result, some insurers are now offering personal cyber insurance to mitigate a few of these risks. Various events can trigger cyber insurance claims, but the most prevalent include ransomware, fund-transfer fraud assaults, and corporate email compromise schemes. The expense of cyber insurance is determined by several criteria, including the size of the company and its yearly income.

Disruptive impact

As the landscape of cyber threats continues to evolve, the role of cyber insurance is expected to shift from being merely reactive to becoming more proactive. Insurance providers may begin to play a more active role in helping their clients bolster their cybersecurity measures. They might offer services such as routine security audits, employee training programs, and recommendations for security software. This shift could lead to a more collaborative relationship between insurers and insured parties, fostering a culture of shared responsibility in combating cyber threats.

In the long run, this could lead to a significant change in how companies approach cybersecurity. Instead of viewing it as a burdensome cost, companies might start to see it as an investment that could potentially lower their insurance premiums. This could incentivize companies to adopt more robust cybersecurity measures, leading to a decrease in the frequency and severity of cyberattacks. Furthermore, this could also encourage innovation in the cybersecurity industry, as demand for advanced security solutions increases.

Governments could also benefit from the evolution of cyber insurance. As companies strengthen their cybersecurity measures, the overall risk of large-scale cyberattacks affecting critical infrastructure could be reduced. Moreover, governments could work with insurance providers to develop standards and regulations for cybersecurity, promoting a more secure and resilient digital environment for all.

Implications of cyber-insurance

Wider implications of cyber-insurance growth may include:

Insurance companies increasingly providing expert cybersecurity enhancement services in addition to cyber insurance policies. Accordingly, insurance companies may become among the top recruiters for cybersecurity talent.

The creation of more legitimate jobs for hackers, due to a growing demand for professionals who understand hacking methods and how to defend against them.

Increased interest in Information Technology at an academic level, leading to more graduates in the hiring pool, as cybersecurity threats become a public concern.

Higher average rates for business insurance packages as cybersecurity features become increasingly common and (potentially) required by the law.

A more digitally literate society as individuals and businesses become more aware of the importance of cybersecurity, leading to safer online behaviors and practices.