Cyber security insurance on the fast track

On December 21, the Ministry of Industry and Information Technology issued the "Notice on Organizing and Carrying out the Pilot Work of Cyber Security Insurance Services" (hereinafter referred to as the "Notice"), stating that it is necessary to accelerate the implementation and application of the new model of cyber security insurance and organize the pilot work of cyber security insurance services.

According to the Notice, the pilot insurance types of this service mainly include two categories: cyber security property insurance and cyber security liability insurance. Industry experts said that the main reason is that these two types of insurance have a wide range of applications and market demand in cyber security risk protection.

Two types of insurance will be piloted first

Cyber security insurance is a type of insurance that provides insurance protection for cyber security risks, which refers to a type of insurance in which the insured suffers from cyber security problems due to the use of the Internet, and the insurance company is responsible for compensating for the losses caused by the insured.

With the development of the mobile Internet, the application scope of artificial intelligence, big data and other technologies has expanded, and network security problems such as data leakage, hacker attacks, and network fraud have gradually become prominent. Cyber security insurance is an emerging type of insurance that provides protection for cyber security risks, is an important tool for transferring and preventing cyber security risks, and plays an important role in promoting the construction of a cyber security socialized service system.

On December 21, the Ministry of Industry and Information Technology issued the "Notice", stating that it is necessary to accelerate the application of the new model of cyber security insurance and organize the pilot work of cyber security insurance services. The "Notice" pointed out that combined with the existing types of cyber security insurance in mainland China at this stage, the pilot insurance types mainly include two categories: cyber security property insurance and cyber security liability insurance.

Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, said that the main reason is that these two types of insurance have a wide range of applications and market demand in network security risk protection. Property insurance is mainly for the protection of property losses caused by cyber security incidents, while liability insurance is for the liability for compensation caused by cyber security incidents. Choosing these two types of insurance for pilot projects can better meet the needs of enterprises in terms of cyber security risk protection and promote the further development of the cyber security insurance market.

For the pilot content, the "Notice" said that combined with the actual development of cyber security insurance in the mainland, the pilot content includes enterprise insurance and cyber security products, information technology products, and cyber security service insurance for key industries such as telecommunications and the Internet, industrial Internet, and Internet of Vehicles. With the enterprise legal person as the insured, it mainly protects the property loss or compensation liability caused by the network security incident, and the purchaser of the product and service is the object of protection, mainly protects the property loss or compensation liability caused by the network security incident.

Market difficulties remain

In the past two years, the development of cyber security insurance in mainland China has gradually embarked on the "fast lane", and the industry and regulators have successively issued documents such as the "Cyber Security Insurance Service Specification" and the "Opinions on Promoting the Standardized Development of Cyber Security Insurance" to guide the development of cyber security insurance.

However, from the perspective of market size, the development of cyber security insurance is still lagging behind. Industry data shows that in 2022, the premium scale of cyber security insurance in mainland China will be 140 million yuan, which is double that of 2021, but less than 1/10,000 of the premium scale of property insurance. In addition, compared with the international market, the mainland cyber security insurance market still has a lot of room for improvement. According to the 2022 Global Cyber Security Insurance Market Report, the cyber insurance market size was $9.29 billion in 2021 and approximately $11.9 billion in 2022.

Behind this, there are still many difficulties in the development of cyber security insurance in mainland China. Zhu Keli, executive director of the China Information Association and founding president of the National Research Institute of New Economy, told Beijing Business Daily that with the acceleration of digitalization and frequent cybersecurity incidents, enterprises and individuals have a growing demand for cybersecurity insurance. However, there are still difficulties in the mainland cyber security insurance market, such as the lack of unified pricing standards, imperfect risk assessment system, and imperfect laws and regulations. These problems restrict the healthy development of the cyber security insurance market.

Wang Peng also said that there are still many difficulties in the development of cyber security insurance in mainland China, including unreasonable design of insurance products, imperfect pricing mechanisms, and non-standard claims processes. In addition, due to the complexity and uncertainty of cyber security risks, it is also difficult for insurers to assess and price risks.

According to the "Cyber Security Insurance Research Report" released by the National Industrial Information Security Development Research Center, the supply capacity of cyber security insurance products in mainland China is limited, it is difficult to meet diversified needs, the development consensus has not yet been formed, and it is difficult to break through the cognitive barriers in cross-industry fields.

Pilot to accumulate experience

At present, cyber security insurance is still in the stage of development and popularization, according to the "Opinions", through the organization of cyber security insurance service pilots, a number of high-quality cyber security insurance institutions will be cultivated, a number of replicable and promotable cyber security insurance solutions will be formed, and the high-quality development of the cyber security industry will be promoted.

The Ministry of Industry and Information Technology said that the first is to promote enterprises to improve their ability to respond to cyber security risks. The second is to establish and improve the process mechanism of cyber security insurance, establish standards and specifications for cyber security insurance, improve process standards and requirements for key links such as underwriting, underwriting, and claims settlement, and promote the standardized and healthy development of cyber security insurance. The third is to accelerate the development of new forms of cyber security services and accumulate practical experience in cyber security insurance.

For the future cyber security insurance market, Guo Tao, an angel investor and well-known Internet expert, predicts that first, with the continuous intensification of cyber security problems, the demand for cyber security insurance will gradually increase. Secondly, with the continuous advancement of technology, the product innovation and service model of cyber security insurance will be further optimized and improved. In addition, government support and regulation will also provide a better environment and conditions for the development of cyber security insurance.

For insurance companies and the industry as a whole, how to promote cyber security insurance to take a step forward while actively participating in the pilot? Wang Peng said that the first is to strengthen cyber security risk management and improve the ability of insurance companies to assess and price risks, the second is to promote the innovation and improvement of cyber security insurance products to meet the different needs of different enterprises, the third is to strengthen the supervision and regulation of the cyber security insurance market to ensure the fairness and transparency of the market, and the fourth is to strengthen the publicity and promotion of cyber security insurance to improve the awareness and understanding of cyber security insurance by enterprises and the public.

Beijing Business Daily reporter Li Xiumei