Conceptual and Technological Particularities of Cyber Insurance

Abstract

Cyber insurance (also called cyber liability insurance or cybersecurity insurance) encompasses insurance products designed to cover financial losses incurred by companies as a result of cyber incidents. These assurances are becoming increasingly important for all companies as the problems of cyber-attacks against applications, devices, networks, and users worsen, consequently requiring protection against cyber events, including acts of cyber terrorism, and can help remediate security incidents. This article aims to examine the specific characteristics of cyber insurance as a distinct financial product. The screening of open sources placed on the Internet was applied as a research method. Cyber insurance is an insurance product designed to protect corporate clients from risks related to information technology infrastructure and activities (such as data destruction, data extortion, theft, hacking, and denial-of-service attacks), as well as the liability of companies to third parties for damages caused, for example, by errors and omissions, failure to protect data, or defamation. Such insurance policies may also provide for regular security audits, post-incident public relations and investigation expenses, and criminal reward funds. The main areas that cyber insurance covers include: customer notifications; recovering personal identities; data breaches; data recovery; system damage repair; ransom demands; attack remediation; and liability for losses incurred by business partners with access to business data. Cyber insurance currently forms a continuously growing market segment of the global insurance market. This trend is maintained by the continuous development of the digital economy and e-commerce, the significant increase in the size of damages to companies following cyber incidents, as well as the permanent growth of technologies applied in cybercrime. At the same time, its size remains tiny compared to the global insurance market and the global cybersecurity market. Cyber insurance has a significant set of benefits. However, its spread is hindered by certain factors, the main ones being the specific conditions for the sale of insurance policies and the limits of insurance companies in assuming financial commitments. UDC: 004.056.5:[368.022+368.03](100); JEL: G22, L86.