The Ministry of Science, ICT & Future Planning announced on June 14 that it signs a research agreement with the Consortium of Computer Emergency Response Team on June 16 in order to work on the policy and system for accelerating the growth of the domestic cyber insurance market.
The current size of the market, which is in its early stage now, is estimated at 30 billion won. According to the Use and Protection of Credit Information Act, financial institutions in South Korea are required to maintain their liability insurances with regard to personal information leakage and their limits are two billion won, one billion won and 0.5 billion won depending on the sizes of the institutions. However, these are quite different from internationally accepted cyber insurances in general due to the lack of demands and insurance products provided by insurers. So far, only a handful of insurance companies such as AIG and Samsung Fire & Marine Insurance have released a small number of basic cyber insurance products to compensate for damages and losses attributable to hacking and so on.
In contrast, the cyber insurance markets of the United States and Britain are growing at a rapid pace these days. According to the Korea Insurance Research Institute, the U.S. market is showing an annual growth of 26% to 50% and the size of the global cyber insurance market is expected to reach US$5.9 billion in 2023.
In the meantime, some experts point out that companies might pay less attention to their investment in security after taking out cyber insurance policies. In this regard, the ministry is planning to combine insurers with information security service providers and provide incentives for policyholders. Insurance premium discount for those participating in an information security management system is being mentioned as well although it is a matter to be determined by each insurance company.
“The growth of the cyber insurance industry has just begun in the majority of countries other than some advanced ones like the United States and there is still time for South Korea,” said professor Kim Tae-sung at the Department of Information Security Management of Chungbuk National University, advising, “South Korea’s insurance market is less developed than its IT industry and, as such, cooperation between its security and insurance sectors is essential as of now, and the cooperation can start from the development of a standard glossary for more communication between the two sides.”