The Actuarial Cyber Coverage Conundrum
Are insurance companies offering cyber coverage collecting enough money to cover future cyber events?
Nobody really knows, but there is reason for concern.
Insurance companies are offering more cyber coverage to gain market share. At the same time, data hackers too often elude cyber security experts. In fact, the amount of cyber incidents, including data breaches, continue to climb just as insurers fear a cyber hurricane that could wipe out major systems practically at the same time.
My article defines the conundrum that actuaries face and also examines topics that should interest the non-actuary including the insurance market and the challenges of cyber security.
Here’s the conundrum: how can actuaries appropriately price ever-changing cyber risk when data is scarce and models remain under development?
Besides digging into the conundrum’s implications, my article also offers ways actuaries can, as they do with other insurance lines, get more deeply involved in the underwriting process. The article also offers alternative ways actuaries can gain potentially relevant data and develop models.
I hope you find the piece to be both enlightening and helpful.
To read my other articles on cyber insurance, click here.