Overall, insurance makes
terrorist attacks less damaging because if all the property and lives lost from
an attack are insured, the victims will suffer no overall economic losses. Also,
insurance frequently results in higher investment in security, thus hardening
terrorist targets. This phenomenon is apparently widespread as it has been
observed in many industries “Like in fire prevention, aviation, boiler and
elevator safety where insurance generated safety improvements” (Kesan et al,
2004). Cyberinsurance is an example which is clearly illustrative of this
effect of insurance on many other industries.
New insurance products may make the
Internet a safer business environment because cyberinsurers can require
businesses to undertake loss self-protection activities, as well as tying
premiums to claims histories. … cyberinsurers can proactively tie premiums to
the insured firm’s investment in security processes and create market-based
incentives for e-business to increase their level of IT safety. (Kesan et al,
2004)
“In
addition, the insurance companies have an incentive to monitor hackers in order
to minimize the amount of damage they would have to pay out to its insured
firms” (Kesan et al, 2004). Thus,
insurance companies that sell insurance against terrorism, can be expected to
engage in the gathering of counterterrorist intelligence; greatly aiding the
state security apparatus.
References
Kesan, J.P. et al. [2004],
“The economic case for cyber-insurance”, University of Illinois College of Law,
Law and Economics Working Papers, Paper 2, http://law.bepress.com/uiuclwps/papers/art2
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