The growing legal and technical complexities of cyber insurance policies might be addressed by a simpler process. “’In this respect, we see an interesting trend that we definitely follow and promote, [and that is] a parametric approach. Since many of the cyber events are really black and white, I think a clear claim settlement process and moving into a parametric model would definitely simplify the approach of the industry:’” said Sharon Haran of Parametrix, which offers automated down-time insurance for ecommerce companies.
What is a parametric approach? “The term parametric insurance describes a type of insurance contract that insures a policyholder against the occurrence of a specific event by paying a set amount based on the magnitude of the event, as opposed to the magnitude of the losses in a traditional indemnity policy. An example is a policy that pays $100,000 if an earthquake with magnitude 5.0 or greater occurs. The amount of payment, the parameter, and a third party responsible for verifying that the parameter was triggered must all be specified in the contract:” NAIC.
Source: “Long way to go” on cyber insurance take-up | Insurance Business Canada