Insurance

An insurance is a way to protect and compensate an individual, institution or organisation from (financial) loss. The insurance is based on levels of uncertainty and risk and is a contract between an insurer, such as an insurance company, and the insured, such as a business. Insurances are present in almost every domain imaginable, from car insurance, to life insurance to burial insurance. Take for example a car insurance. When an individual buys or has a car in his/her possession, that individual wants to ensure that no damage can be done to the car. If the individual knew that no damage would be done to the car, it would not be logical to buy an insurance. However, seen that there is some amount of uncertainty and risk involved with driving a car, the individual can buy an insurance at an insurance company. For an x amount of money, the car is insured by the insurance company if any damage would be done. An insurance can be part of a risk management strategy. 

A special type of insurance is cybersecurity insurance. In todays’ society, many organisations have to deal with cybersecurity breaches. In order to prevent cybersecurity breaches, various cybersecurity systems are in place. However, organisations can never guarantee that these cybersecurity systems are 100% safe. Therefore, a cybersecurity insurance can be taken out in order to compensate the organisation for any financial loss that is associated with cybersecurity breaches. Insurance companies often support their clients to minize their cybersecurity risk and require some basic level of protection in their policies. For insurers there is a challenge to make a good assessment of the cybersecurity risk (difficult to quantify) and thereby to determine the insurance premium.

Related keywords: insurance policy, insurance claim, insurance patent, moral hazard, health insurance, income protection insurance, casualty insurance.