Cyber insurance offering and performance: an analysis of the U.S. cyber insurance market
Journal
Geneva Papers on Risk and Insurance: Issues and Practice
ISSN
1018-5895
Type
journal article
Date Issued
2020
Author(s)
Abstract (De)
This article examines the determinants of cyber insurance participation, the amount of coverage offered and the performance of current cyber insurers. Our results support the competitive advantage hypothesis, but only partially support the business growth constraint hypothesis. We find that insurers offer cyber insurance to capitalise on their competitive advantage in understanding and pricing cyber risks. In particular, professional surplus insurers and insurers with surplus insurer affiliation demonstrate a competitive advantage in cyber insurance participation. We find limited evidence that insurers participate in cyber insurance to compensate for constraints on business growth. In addition, the type (standalone or packaged) and amount of coverage offered vary substantially across firm characteristics. Standalone coverage incurs higher loss ratios than packaged coverage, demonstrating its riskier nature. Changes in cyber insurance loss ratios are not driven by premium growth but by claim frequency and severity growth, emphasising the significance of cyber insurance policy design.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Publisher
Palgrave Macmillan Ltd.
Start page
690
End page
736
Subject(s)
Division(s)
Eprints ID
261347