Which Insurers Write Cyber Insurance? Evidence from U.S. Property and Casualty Insurance Industry
Journal
The journal of insurance issues
ISSN
1531-6076
Type
journal article
Date Issued
2018
Author(s)
Abstract
This article is the first to analyze the relationship between corporate characteristics and the writing of cyber insurance in the U.S. property and casualty insurance industry. Given that cyber risk is an emerging dynamic and difficult‐to‐quantify risk category, we interpret the writing of cyber insurance as a risky activity, and link our results to the broad literature on insurers’ risk taking. The results show that insurers with more capital, lower asset risk, greater diversification among business lines and geographic areas, and group members are more likely to write cyber insurance. The
results for different ownership types are ambiguous: although many mutual insurers are more likely to offer cyber coverage as part of existing policies, stock insurers are more likely to sell standalone cyber insurance. We also analyze the interrelationship between writing cyber risk and capital and reinsurance usage with a simultaneous equation model. Besides the positive relationship between capital and the undertaking of cyber risk, the results show that insurers writing cyber insurance policies use more reinsurance to transfer their risk.
results for different ownership types are ambiguous: although many mutual insurers are more likely to offer cyber coverage as part of existing policies, stock insurers are more likely to sell standalone cyber insurance. We also analyze the interrelationship between writing cyber risk and capital and reinsurance usage with a simultaneous equation model. Besides the positive relationship between capital and the undertaking of cyber risk, the results show that insurers writing cyber insurance policies use more reinsurance to transfer their risk.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
WRIA
Publisher place
Northridge, Calif.
Volume
41
Number
1
Start page
22
End page
56
Subject(s)
Division(s)
Eprints ID
254635