The traditional coverage offered by Europe’s insurance providers may not comprehensively address present-day digital risk, according to the European Network and Information Security Agency (ENISA).

A new report from the digital risk agency, Incentives and barriers to the cyber insurance market in Europe, which calls for a kick-start in the cyber insurance market, identifies a lack of actuarial data on the extent of the risk and uncertainty about what type of risk should be insured against among the obstacles to the development of an effective cyber insurance market.

To address these issues, ENISA makes four recommendations:

•Collect empirical data on cyber insurance in Europe, looking at types of risk insured, premiums paid and levels of payouts to determine future trends. The action could be taken by insurance underwriters, firms or regulatory authorities.

•Examine incentives for firms to improve their data security as a way for them to reduce their risk and financial liability if they breach data protection regulations. Fact finding with the European Commission would be a first step to understanding this area.

•Establish agreed frameworks to help firms put a measurable value on their information. The work could be assisted by privacy and information security advisors, underwriters and the European Commission. ENISA could also provide further support.

•Explore the role of governments as an insurer of last resort, following other models where policy intervention is in evidence when catastrophic risk is involved. This could be investigated by EU Member State governments and the European Commission.

According to ENISA’s executive director, Professor Udo Helmbrecht, this new report indicates that there is potential for Europe’s cyber security policies and legislation must be complemented by a prevention-focused cyber insurance market.

"As well as providing reassurance that proper cover was available, a developed market in this area would help to improve levels of cyber security by putting a true cost on cyber incidents and showing the benefits of implementing good security practices,” Professor Helmbrecht said.

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