Reports Outline Insurance Study Findings from Southeast University (Modeling and Pricing Cybersecurity Insurance With Information Asymmetry): Insurance

2026 AUG 21 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Investigators discuss new findings in Insurance. According to news reporting originating from Nanjing, People’s Republic of China, by NewsRx correspondents, research stated, “Firms typically invest in security measures to reduce potential losses from cyber incidents. Since such measures cannot fully eliminate cyber risks, cyber insurance plays an important role in hedging residual losses.”

Funders for this research include National Natural Science Foundation of China (NSFC), Fundamental Research Funds for the Central Universities.

Our news editors obtained a quote from the research from Southeast University, “This paper studies contract design in a monopolistic cyber insurance market where policyholders differ in their underlying risk levels and choose unobservable security effort. We consider both risk-neutral and risk-averse agents and develop a theoretical framework to derive optimal insurance contracts and security investments. These contracts are designed to alleviate moral hazard and adverse selection under three information scenarios. The theoretical results reveal three main incentive effects: premium discounts promote security effort, more generous coverage weakens the incentive to protect, and protection generated by neighboring firms creates a substitution effect that weakens individual effort.”

According to the news editors, the research concluded: “Numerical experiments compare the optimal premium discount, coverage rate, security effort, and the insurer’s expected payoff across the three information scenarios.”

For more information on this research see: Modeling and Pricing Cybersecurity Insurance With Information Asymmetry. AIMS Mathematics, 2026;11(7):22354-22379. AIMS Mathematics can be contacted at: Amer Inst Mathematical Sciences-aims, PO Box 2604, Springfield, Mo 65801-2604, United States.

The news editors report that additional information may be obtained by contacting Xin Zhang, Southeast University, School of Mathematics, Nanjing 211189, People’s Republic of China. Additional authors for this research include Rong Hu and Na Ren.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.3934/math.2026904. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

(Our reports deliver fact-based news of research and discoveries from around the world.)