SecurityWeek‘s interesting report covers the pros/cons of the cyber insurance backstop the Biden Admin seems to be advancing. The benefits to the industry of having the government cover fall-out from a systemic and/or war-related cyber event appear clear. But there are potential downsides.
“The purpose of a backstop would be to make cyberinsurance more widely available and affordable to the whole market – but it isn’t yet clear whether this can be achieved. (Andrew Moss, insurance recovery litigation partner at Reed Smith) warns that a backstop on its own could have a detrimental effect. If a backstop is provided without a required linkage between insured’s security posture and premiums, ‘insurer’s capacity is substantially released from constraints. Suddenly, there’s too much insurance available – and the result is effectively a race to the bottom from an underwriting perspective.’”
The purpose of a backstop would be to make cyberinsurance more widely available and affordable to the whole market – but it isn’t yet clear whether this can be achieved.
Source: Cyberinsurance Backstop: Can the Industry Survive Without One?