Cyber Insurance – Current State of Affairs

Although 1.5 years old, the CIP Report on Cyber Insurance still rings true with respect to several areas. Before discussing these areas, let’s take a look at the general theme of the report.

According to George Mason University, the market for cyber insurance is at $350M. Many organizations use cyber insurance as another layer of defense in their efforts to combat threats to their computing environments. As data grows exponentially and the systems used to house, process and transmit this data expands in equal amounts, so too does the level of risk. 

Insurance firms use historical data to predict risk, mining actuarial tables gathered from proven statistics. These same firms find it very difficult to provide a comprehensive product when the data available is not complete and the risk is difficult to measure. What the insurance firms face is exactly what information security and assurance professionals face; the inability to accurately predict probability of occurrence and subsequently, the associated risk. Cyber insurers have not progressed very quickly due to the lack of industry data.