The Problem with Cybersecurity Insurance

The cybersecurity industry faces challenges, and some of them may involve your business…

An article review.

In a world where threats to your organization’s electronic assets are constantly emerging and evolving a cybersecurity insurance policy can help mitigate risk…but what kind of risk does the cybersecurity insurance industry face?  A new article in the Harvard Business Review takes a look at the issues facing this sector of the insurance industry, and some of the problems the author has uncovered may impact your own organization.

In order to evaluate risk and determine the most appropriate level of coverage, insurers in other sectors can look to the past–sometimes centuries of data are available, such as with weather events and other natural disasters.  But when it comes to cybersecurity, the industry only has a few decades of data to reference…and given how rapidly digital threats have evolved, just how relevant is the data from 2000?

The main issue resulting from this lack of experience relative to other insurers is two-fold: the insurers themselves may not have adequate resources to respond to multiple, high-profile payouts, and the insurers may have difficulty making recommendations to you about the correct amounts of coverage you should have.

While the author of the article does not suggest there’s a significant risk of cybersecurity insurers failing, he does believe that both the rates offered by insurers and the level of coverage they offer may be subject to change from year to year.  Accordingly, he believes that your organization should also be approaching the subject as an ongoing concern, as threats evolve your organization’s level of exposure can change, and so can the potential financial damages.

Original article by Tom Johansmeyer writing for the Harvard Business Review.



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