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Cyber risk transfer tools proliferate as breaches rise

Wednesday, February 22, 2023

Significance

However, pricing these policies is tough due to incomplete modelling data about the frequency and cost of breaches, and uncertainty about the scale and interconnectedness of cyber risks. These concerns, alongside spikes in threats such as ransomware, have caused insurers to restrict the coverage they are willing to sell, leading firms to seek out means for transferring cyber risk.

Impacts

  • Security firms face rising pressure to provide some warranty if their service fails to prevent or detect a breach.
  • Insuring against state-linked cyberattacks will becoming increasingly complicated as attribution problems mount.
  • Reinsurers will shape the size and growth of the cyber risk transfer market, due to their concerns about catastrophic cyber risk.

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