Cyber insurance demand, supply, contracts and cases
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Cyber insurance demand, supply, contracts and cases M. Martin Boyer1 Published online: 26 August 2020 © The Author(s) 2020
This special issue of The Geneva Papers on Risk and Insurance—Issues and Practice on Cyber Insurance is the second in three years (see volume 43 of The Geneva Papers published in 2018) to cover the emerging threat of cyber risks to firms, organisations, individuals and society as a whole. The first special issue published only four papers; the current special issue publishes eight. The increase in the num‑ ber of articles in this special issue reflects the growing popularity of the topic not only amongst academics, but also amongst corporate researchers. The 2020 World Risk and Insurance Economics Conference, which was held virtually, had a session devoted to cyber risk, something that would have been unimaginable five years ago.1 What is cyber risk? One definition that can be used is any attack using electronic devices that causes damage to an organisation or an individual, such as denial of service or the theft or destruction of data for organisations, individuals or other‑ wise. Such attacks take the form of malicious codes, malware, trojans, worms and phishing, to name but a few.2 Cyber insurance usually covers only direct losses, even though indirect losses can be much larger. Whatever cyber risk is, it is certainly dif‑ ficult to define precisely.3 The eight papers included in the current special issue are divided according to three classifications. The first three papers examine the potential demand for cyber risk insurance by assessing the potential loss for firms and organisations that fall victim to a cyber event. The next three papers examine the supply side by presenting issues related to how contracts are written and interpreted by the courts, and how the writing and the interpretation of cyber contract clauses could have an impact on other insurance contracts. Lastly, the special issue concludes with two papers that 1
https://www.wriec2020.org/ Goode et al. (2017), Culnan and Williams (2009) and Rasoulian et al. (2017) include information breach, which they define as unauthorised access to personal information of a group of individuals, as a source of cyber risk. 3 See the excellent cyber insurance reviews of Eling and Schnell (2016) and Marotta et al. (2017). 2
* M. Martin Boyer [email protected] 1
Power Corporation of Canada Research Chair, Department of Finance, HEC Montréal (Université de Montréal), 3000, chemin de la Côte‑Ste‑Catherine, Montréal, QC H3T 2A7, Canada Vol.:(0123456789)
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examine how cyber risk applies to two industries: health insurance and information technology. Before briefly summarising the papers in this issue, it feels appropriate to remind ourselves that the lack of proper data regarding cyber losses remains problematic in analysing the actual risk of cyber incidents, and to infer what the demand and supply of cyber insurance should be. Eling (2018) writes (p. 177): Not only is the lack of data a major concern for insuranc
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