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The Economic Case for Cyberinsurance

Jay P. Kesan
University of Illinois - College of Law

Ruperto P. Majuca
University of Illinois at Urbana-Champaign - Department of Economics

William J. Yurcik
University of Illinois at Urbana-Champaign - National Center for Supercomputing Applications (NCSA)



SECURING PRIVACY IN THE INTERNET AGE, Stanford University Press, 2005

Abstract:     
We present three economic arguments for cyberinsurance. First, cyberinsurance results in higher security investment, increasing the level of safety for information technology (IT) infrastructure. Second, cyberinsurance facilitates standards for best practices as cyberinsurers seek benchmark security levels for risk management decision-making. Third, the creation of an IT security insurance market redresses IT security market failure resulting in higher overall societal welfare. We conclude that this is a significant theoretical foundation, in addition to market-based evidence, to support the assertion that cyberinsurance is the preferred market solution to managing IT security risks.

Keywords: Cyberinsurance, liability, internet security

Accepted Paper Series

Date posted: August 18, 2004 ; Last revised: September 29, 2009

Suggested Citation

Kesan, Jay P., Majuca, Ruperto P. and Yurcik, William J., The Economic Case for Cyberinsurance. SECURING PRIVACY IN THE INTERNET AGE, Stanford University Press, 2005. Available at SSRN: http://ssrn.com/abstract=577862


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Contact Information

Jay P. Kesan (Contact Author)
University of Illinois - College of Law ( email )
504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
217-333-7887 (Phone)
217-244-1478 (Fax)
HOME PAGE: http://www.jaykesan.com
Ruperto P. Majuca
University of Illinois at Urbana-Champaign - Department of Economics ( email )
1301 W. Gregory Drive
Urbana, IL 61801
United States
William J. Yurcik
University of Illinois at Urbana-Champaign - National Center for Supercomputing Applications (NCSA) ( email )
605 E. Springfield Avenue
Champaign, IL 61820
United States
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