Cyber-Insurance Revisited

Cybersecurity is primarily a problem of incentives. Though technical solutions to security threats exist, these solutions are under-utilized due to a lack of incentives. Cyber security demands both technical and economic solutions. Responsibility attribution is the main cause of weak security. Manufacturers should be liable for problems in their products, while liability should also be transferred to those who could reduce the risk easily. These cyber risks should also be transferred so that parties can take out insurance against losses from cyber-security breaches. When insurance companies differentiate premiums based on risk, people will have the incentive to invest in secure technology to receive a cheaper premium. This uses the indemnity insurance model. Cyber-insurance monetizes the value of security, thus making evaluation and finding the right level of protection possible.