Creating a Cyber Insurance Market in Iran؛ The Institutional Role of Government and Its Impact on Enterprises

Document Type : Original Article

Authors

1 ICT Security Research Faculty, Iran Telecommunication Research Center, Tehran, Iran.

2 Assistant Professor in ICT Research Institute, Tehran, Iran

Abstract

Cyber attacks can have severe and damaging consequences for businesses, governments, and individuals, resulting in financial losses, harm to reputation, and disruptions to essential infrastructure. As the digital landscape evolves and cyber threats escalate, the need for more robust cyber risk management strategies has led to the expansion of the cyber insurance market as a vital defense against these threats. Cyber insurance not only acts as a standalone risk control measure but also impacts other risk management practices. The growth of this market benefits the overall insurance industry and enhances its market penetration. However, despite the cyber insurance market becoming a primary method for managing cyber risk in many countries over the past thirty years, various businesses in Iran lack access to such a market. This study aims to explore the reasons behind the absence of a cyber insurance market in the Iranian economy. By reviewing the literature on market failures in economics and proposing a conceptual model for the cyber insurance market, our findings suggest that the high relative level of cyber risk and excessive transaction costs pose significant obstacles to establishing this market in Iran. We recommend the creation of a platform named the Cyber Insurance Market Guide, focused on designing and implementing government institutional policies to foster the development of the cyber insurance market.

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