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THE EVOLUTION OF CYBER INSURANCE INDUSTRY: UNRAVELING THE COMPLEXITIES

SHARESHARESHARE

The cyber risk insurance industry is rapidly developing, with a staggering worldwide gross written premiums rising from 850 million dollars in 2012 to about 2.5 billion dollars in 2014. The market is growing fast due to the increasing number of cyber-attacks and the intensifying technological dependence of companies on operational competencies and data storage. Amidst this rising demand, however, insurance firms are still struggling to define policies. A number of imperfections in the market are still not being addressed and this may lead to a sub-optimal outcome. As of June 2014, the total global cybercrime losses was 445 billion dollars. The governments’ heightened involvement in cyber threats could mean that compulsory cyber risk insurance is on the horizon and this would definitely transform the insurance market into a robust revenue source. Both businesses and the insurance industry should respond now to be able to manage the big shift.