Study Results from University of Edinburgh Update Understanding of Insurance (Economics of Incident Response Panels In Cyber Insurance): Insurance

2024 MAY 06 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Researchers detail new data in Insurance. According to news reporting originating from Edinburgh, United Kingdom, by NewsRx correspondents, research stated, “Cyber insurance is becoming a popular cyber risk management tool. Beyond pure financial risk transfer, prior theoretical works anticipated that cyber insurance would influence the mitigation measures employed by policyholders, such as by excluding losses caused by security mismanagement or by offering premium discounts for security controls.”

Our news editors obtained a quote from the research from the University of Edinburgh, “Empirical literature has shown cyber insurance is ineffective at influencing prebreach security levels; however, it has also identified how insurers indemnify the cost of a team of post -breach providers with expertise spanning legal, technical, and communications. Our work models the peculiarities of the institution, the panel, that triages incidents and assigns firms. In particular, we model the incomplete aspect of this contract in which policyholders may be assigned a less efficient firm, which can be interpreted as a bait and switch. At the same time, our context for the bait and switch is business -to -business (B2B) and differs from the usual understanding of the phenomenon as an upsell. Consequently, new managerial implications arise on the insurer -side of the market. We characterise the conditions under which policyholders accept their insurer’s hotline recommendation for incident response under the incomplete contract.”

According to the news editors, the research concluded: “We additionally show how panels can mitigate the adverse selection problem with respect to policyholders’ losses by including providers of differentiated efficiency.”

This research has been peer-reviewed.

For more information on this research see: Economics of Incident Response Panels In Cyber Insurance. Computers & Security, 2024;140. Computers & Security can be contacted at: Elsevier Advanced Technology, Oxford Fulfillment Centre The Boulevard, Langford Lane, Kidlington, Oxford OX5 1GB, Oxon, England. (Elsevier - www.elsevier.com; Computers & Security - http://www.journals.elsevier.com/computers-and-security/)

The news editors report that additional information may be obtained by contacting Daniel W. Woods, University of Edinburgh, School of Informatics, Edinburgh, United Kingdom. Additional authors for this research include Daniel Arce and Rainer Bohme.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.cose.2024.103742. 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.

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