Incident-Specific Cyber Insurance
In the current market practice, many cyber insurance products offer a coverage bundle for losses arising from various types of incidents, such as data breaches and ransomware attacks, and the coverage for each incident type comes with a separate limit and deductible. Although this gives prospective...
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Main Authors | , , , |
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Format | Journal Article |
Language | English |
Published |
01.08.2023
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Subjects | |
Online Access | Get full text |
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Summary: | In the current market practice, many cyber insurance products offer a
coverage bundle for losses arising from various types of incidents, such as
data breaches and ransomware attacks, and the coverage for each incident type
comes with a separate limit and deductible. Although this gives prospective
cyber insurance buyers more flexibility in customizing the coverage and better
manages the risk exposures of sellers, it complicates the decision-making
process in determining the optimal amount of risks to retain and transfer for
both parties. This paper aims to build an economic foundation for these
incident-specific cyber insurance products with a focus on how
incident-specific indemnities should be designed for achieving Pareto
optimality for both the insurance seller and buyer. Real data on cyber
incidents is used to illustrate the feasibility of this approach. Several
implementation improvement methods for practicality are also discussed. |
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DOI: | 10.48550/arxiv.2308.00921 |