Insuring the ‘uninsurable’ cyberwarfare: rethinking war exclusions in cyber policies and the role of insurance in global cybersecurity governance

This paper examines the insurance of cyber-related risks, concentrating on cyberattacks that fall under the war exclusion in insurance contracts. We argue that though it is understandable that insurers include war exclusions to limit their risk exposure, this seriously limits the availability of cover when it is most needed. One of the problems is that insurers do not engage as often in risk differentiation as is predicted by the theory holding that insurance is a governance system. We therefore argue that there is an important role for governments to play, similar to other major risks like natural catastrophes and terrorism where the state often acts as a reinsurer of last resort. This paper argues that a multilayered insurance arrangement with governments could play an important role in guaranteeing substantial compensation to victims in case of cyberwar, while also reasonably limiting the risk exposure of insurance companies.