Echoworx Talking Security –
Cyber Insurance: What it is and how it works
Compared with its insurance counterparts, cyber insurance is more of a new kid on the block. As such, determining where this type of insurance is going, what potentially could be covered in the future and what future challenges await claims can be difficult. But insurance companies are clever and learn quickly from mistakes.
The most likely future scenario of cyber insurance is the further diversification of the different segments which make up these types of policies. Insurance firms are likely to slice and dice their cyber insurance offerings into different pieces so that they can be sewed into different custom policies – like a Frankenstein Monster.
While this seems excessive, by breaking their cyber insurance products into different segments, insurance companies are attempting to make their products more competitive, more accessible for different business and, ultimately, more affordable on account of increased custom value to an organization.
The growing demand for cyber insurance and continued evolution of it as a product is driven by two forces: new privacy regulations, like the GDPR, and the insurance firms themselves. While the new privacy regulations lay out the fines and punishments, the insurance companies react to increased risk on account of the changing rules. In a nutshell: If the fines are bigger, and a policy needs to cover these bigger fines, the risk grows.