Società Italiana di Diritto ed Economia, SIDE - ISLE 2015 - 11TH ANNUAL CONFERENCE

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Bottlenecks for growth in the Dutch cyber insurance market for SMEs anno 2015: an empirical assessment.
Bernold Nieuwesteeg

Last modified: 2015-12-05


This paper empirically analyses the law and economics of the Dutch cyber insurance market for SMEs. We requested policies from 10 insurers, on behalf of 6 companies, varying in size and internet dependency.

In theory, insurance increases efficiency in the cyber security market because a.) risks can be pooled and hence reduced, and b.) insurers foster risk reduction at the insured. But, scholars also mention several barriers for market growth: high premiums, few competitors in the market and high secondary losses. We test whether growth barriers exist in –amongst others - premiums, deductibles, caps, coverage and moral hazard clauses of 10 policies.

Our results indicate that cyber insurance premiums decreased 10-fold the past 15 years. Moreover –in 2015– there are 10 players operating on the Dutch market offering a variety of protection. Thus, affordability and choice has been increased, but other issues are not tackled yet. For instance, a part of cyber risk is still not insurable. On top of that, we identify new bottlenecks in difficult requesting procedures and difficulties to compare policies of different insurers: so-called high information costs.

We recommend more transparency in the cyber insurance market, for instance: a platform that fosters comparison on price and coverage. The government should also consider a certain baseline cyber insurance coverage, which guarantees minimum protection. Furthermore, we recommend independent research on the consumer side of cyber insurance. This research should focus on actual usage and awareness of cyber insurance products.

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