Cyber Risk and Cyber Insurance

Martin Eling ()
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Martin Eling: University of St. Gallen

A chapter in Handbook of Insurance, 2025, pp 199-224 from Springer

Abstract: Abstract This chapter provides a comprehensive analysis of the insurability of cyber risks by examining both academic literature and industry studies. We address five key research questions, including the measurement of cyber risk, the economic impact of cyber risk, comparisons with other types of risks, an analysis of the current cyber insurance market, and a discussion of insurability limitations that are currently hindering market growth. The underdevelopment of the cyber insurance market can be attributed to four distinct characteristics of cyber risk. These include heavy tail distributions, non-linear dependencies leading to potential accumulation risk, model/parameter risk, and asymmetric information. These factors make cyber insurance unappealing from the perspective of insurance companies. Furthermore, there are several demand-side factors that are also impeding the growth of the market.

Keywords: Cyber risk; Cyber insurance; Digitalization; Insurability; Risk management; G22; G32 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-69561-2_7

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DOI: 10.1007/978-3-031-69561-2_7

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