The internet penetration has increased in the world that all the media and banking transactions are digitalized. We are unknowingly exposed to various cyber-attacks in these digital transactions. The cyber attacks range from misuse of your financial information to data theft, cyber stalking etc.
Cybersecurity insurance has been a concern for the industry and the government as far back as the 1990s. At that time, one of the biggest threats was intellectual theft and copyright infringement. Some of the big players in the computer industry were worried about other rivals stealing their innovations and presenting them as their own.
Eventually, this led to the modification of the original policies so that they included both the first and third-party elements. Some of the costs that are still covered today include:
- Business Interruption
- Penalties and Fines
- Costs of Monitoring Credit
- Costs Related to Public Relations
- Costs associated with Rebuilding or Restoring Private Data
Some of the key issues for the industry as it reconfigures its services include the following:
- There is a wide diversity of users. Some of them are high-risk. Others are low-risk. But, all are competing for a few products within a small market.
- The adverse risk selection process keeps out those that need and want the insurance most out of the market because the insurer cannot take on the risk that they are assigned.
- High-loss probabilities result from the inadvertent actions or omissions of the client including not having the right protective infrastructure in the first place.
- There is a lack of positive externalities. The industry is not developed enough to attract other partners to ensure that the service user gets a comprehensive package of support.