Supply of cyber insurance in banking sector operating in Portugal

• Author(s): Martins, Ana Rita Batista
• Date: 2020
• Persistent ID: http://hdl.handle.net/10362/106927
• Origin: Repositório Institucional da UNL
• Subject(s): Cyber Risk; Cyber Insurance; Operational Risk; Banking sector; Insurance sector
• Document Type: Master thesis
• Language: English
• Advisor(s): Gonçalves, Rui Alexandre Henriques
• Contributor(s): RUN

Description

Dissertation presented as the partial requirement for obtaining a Master's degree in Statistics and Information Management, specialization in Risk Analysis and Management

The development of technology and the way of doing business exchange sensitive information all over the world through IT resources. In consequence of such reality, cyber events are more likely to occur, being the banking sector one of the major targets. However, in parallel with these new perils from technological growth, awareness of cyber risk is also increasing among institutions, as well as the search for protection and measures to fight them. Cyber insurance is one of the possible protection options. The main goal of this work is to assess the supply of cyber insurance among the banking sector operating in Portugal. As empirical investigations of cyber insurance applied in the country are rarely reported in the literature, the results are novel. In order to get the main goal, the research is based on a literature review where will be presented the “state of the art” of cyber insurance market in the world and in the country. In addition, an empirical study will be made through the application of questionnaires to ascertain the specificities of cyber insurance suppliers or potential suppliers in the Portuguese market, their perception of market evolution and knowledge about cyber risk. There is also a specific questionnaire for the supervisor entity in order to know its point of view about the topic in discussion. The main conclusions of this study relate to the fact that there is still a long way to go in the Portuguese insurance sector for cyber risk. The sector in the country started to be developed by international companies and only after that the national ones started to have more awareness on the subject, as mentioned by the Autoridade de Supervisão de Seguros e Fundos de Pensões (ASF). However, awareness of the issue is not the only point that leads to the underdevelopment of this specific insurance. The difficulties in the product underwriting process, which on the part of those who sell as well as those who buy, the high and variable prices, the lack of historical data and the information asymmetries are examples of obstacles that still have to be overcome. Although the cyber risk insurance sector is taking its first steps, it is believed to have a large margin of expansion, as has already been the case in several other countries. The creation of information sharing platforms on cyber incidents and the design of insurance and reinsurance products for cyber incidents are considered by the participant insurers as the main measures to be taken to assist this market development. It therefore becomes an inevitable topic to be addressed by the insurance sector in Portugal.