Cyber insurance unpacked: the corporate digital safety net
In a more digitalised and interconnected world, cyber risk is increasingly recognised as a significant threat to economic and financial stability. The rapid evolution of cyber threats driven by technological advances, including artificial intelligence (AI), rising geopolitical tensions and the interconnected nature of digital ecosystems, is increasing the speed, scale, sophistication and systemic nature of both malicious and non-malicious cyber incidents. Against this backdrop, cyber insurance has the potential to support cyber resilience and mitigate the financial losses arising from cyber incidents, where insurable. Despite the rapid growth in exposure to cyber risk, cyber insurance coverage remains limited, and the market continues to face significant challenges related to coverage ambiguity, pricing and accumulation risk.
Based on desktop reviews and interviews with regulators, insurers, reinsurers, brokers and other market participants, this paper takes stock of the evolving cyber insurance landscape. In particular, it examines cyber insurance product coverage, pricing and underwriting practices, and explores the protection gap. The paper also highlights key considerations for supporting the sound and sustainable development of cyber insurance markets.
JEL classification: G18, G22
Keywords: cyber risk, insurance, operational resilience
