The cyber threats businesses are confronted of daily are constantly evolving. The introduction of cyber insurance by AIG in 1997 created a belief that protection against these threats was no possible.
Despite its growth, the cyber insurance industry is facing several challenges that need to be addressed to ensure that it continues to provide adequate protection for businesses and individuals. As cyber threat evolves, the cyber insurance industry needs to follow suit.
One of the main challenges in the cyber insurance industry is the lack of standardization in policy coverage. Different insurance companies offer varying levels of coverage, making it difficult for businesses to compare and choose the right policy. This lack of standardization also leads to confusion among policyholders, who may not fully understand the coverage they have purchased, nor understand potential pitfalls where their own actions will deny coverage.
Another challenge is the difficulty in accurately assessing the risk of a cyber-attack or data breach as a result of a company’s cyber hygiene. As the threat landscape is constantly evolving, it can be difficult to accurately predict the likelihood of an attack and the potential losses that may result, because a company isn’t truly aware of the risk inherent in their network infrastructure.
Another issue in the cyber insurance industry is the lack of data privacy laws and regulations. In many countries, there are no laws or regulations in place that govern how companies must protect customer data. This can result in companies failing to properly secure customer data, which can lead to data breaches and significant losses and extensive losses to the insurance company resulting in increased premiums or outright denial of service.
The cyber insurance industry is also facing a shortage of skilled cyber security professionals, as are their insurance customers. As cyber-attacks become more sophisticated and frequent, there is a growing demand for professionals with the skills and knowledge necessary to prevent and respond to such attacks. However, there is a shortage of individuals with these skills, which is making it difficult for companies to find the talent they need to protect their systems and data and for cyber insurance companies to adequately assess the overall cyber risk profile a company may have.