Subcommittee aims to address issues facing the cyber protection space
Cyber security is beginning to gain the attention of the U.S. federal government. The House Homeland Security’s cyber security subcommittee has held a hearing concerning the challenges facing the cyber insurance space. A recent report predicted that this market would reach $7.5 billion in annual premiums by 2020, making it one of the fastest growing insurance segments in the world. The need for cyber protection, on the insurance level, is becoming more apparent, especially as digital attacks become more common.
Insurers still lack a wealth of data to write effective cyber protection policies
Unlike conventional property/casualty insurance, cyber protection is somewhat more complicated for the insurance industry. Insurers have several decades of weather-related data that can be used to write effective insurance policies to protect consumers from natural disasters. This is not the case with cyber insurance, however, as the digital world can still be considered quite new. Digital threats are not fully understood and, in some cases, can be as impossible to predicts as natural disasters. Cyber attacks can also cause significant financial damage, especially due to the fact that consumer information can be stolen with relative ease.
Incentives may be needed to encourage the acquisition of cyber protection
One of the issues that the cyber security subcommittee is interested in addressing is how cyber insurance can be used to protect consumers and businesses. The subcommittee also wants to find out if incentives can be put in place to encourage the purchase of cyber protection. In terms of homeowners insurance, consumers are often provided with incentives to purchase smoke detectors, and these incentives can come in the form of discounted coverage.
Lawmakers may not seek to affect the cyber insurance space at this time
Legislative action on the cyber insurance matter may not be taken any time soon. The insurance industry is already adapting very quickly to the increasing frequency of digital attacks and is beginning to offer coverage that can mitigate the financial impact of such attacks. Many insurers are attempting to limit their own exposure to risks, however, which may limit the coverage provided through certain cyber protection policies.