The cyber insurance market in Sweden

Abstract

This article is a characterization of the cyber insurance market in Sweden. As empirical investigations of cyber insurance are rarely reported in the literature, the results are novel. The investigation is based on semi-structured interviews with 10 insurance companies active on the Swedish market, and additional interviews with 2 re-insurance companies and 3 insurance intermediaries. These informants represent essentially all companies selling cyber insurance on the Swedish market. Findings include descriptions of the coverages offered, including discrepancies between insurers, and the underwriting process used. Typical annual premiums are found to be in the span of some 5–10 kSEK per MSEK indemnity limit, i.e. 0.5–1% of the indemnity limit. For business interruption coverage, waiting periods are found to be relatively long compared to many outages. Furthermore, insurance companies impose information and IT security requirements on their customers, and do not insure customers that are too immature or have too poor security. Thus cyber insurance, in practice, is not merely an instrument of risk transfer, but also contains aspects of avoidance and mitigation. Based on the findings, market segmentation, pricing, business continuity, and asymmetry of information are discussed, and some future work is suggested.