The Impact of Cyber Security Policy on Insurance Industries in the European Union

The Impact of Cyber Security Policy on Insurance Industries in the European Union
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Table of Contents Introduction. 3 Research Questions. 3 Assessing the Problem.. 3 Assessment of the EU Situation. 5 State of Art 7 The EU Cyber Solidarity Act 7 Cybersecurity Emergency Mechanism.. 7 European Cyber Security Shield. 8 The EU Cybersecurity Act 8 EU's Cybersecurity Strategy. 9 Future Challenges. 10 Future Options. 11 Policy Recommendation. 12 Conclusion. 12 References. 14
The Impact of Cyber Security Policy on Insurance Industries in the European Union
Introduction
A cyber security policy is a document that outlines the overall methodology, expectations, and rules that an organization uses to prevent and tackle cyber attacks. Cyber-attacks are common in most industries that embrace technology (Carrapico & Farrand, 2020). European Union has set measures to prevent cybercrime through its cyber security policy acts. This paper shall investigate the impact of cyber security policy on insurance industries in the European Union.
Research Questions
* Does the EU's Insurance industry experience cyber-attacks?
* To what level does the EU cyber security policy effective in the insurance industries?
* Does the Cyber Security Policy affect the insurance sector's security issues positively or negatively?
Assessing the Problem
Cyber security is one of the significant threats to all financial sectors. In addition, the digitalization of insurance industries has exposed potential cyber security threats to this sector (Fuster & Jasmontaite, 2020). One of the primary reasons the insurance industry poses a significant risk to cyber attacks is that they have crucial and confidential policyholders' data. Therefore, large amounts of data may attract cyber attackers, increasing security concerns. When the attackers obtain policyholders' crucial data, they may use it to do criminal activities or use personal information for malicious activities such as stealing money from the bank. Due to these reasons, cyber security policies became necessary globally, including in the EU, to minimize various instances of cyber security.
Cyberspace is one of the most complex environments since it involves the interaction of software, people, and services through information and communication technology networks and devices. Notably, the evolving technology leads to new threats to the digital space, which may affect the normal operations of organizations (Wessel, 2019). Cybersecurity policies provide the framework that various sectors should adopt to prevent cybersecurity instances. Moreover, cybersecurity policies also outline measures that the affected parties can use to solve cyberattacks. Therefore, cyber security policies are crucial to organizations.
According to Christen et al. (2020), cybersecurity policies are guidelines and rules that govern information and technology activities in organizations. In addition, these policies ensure maximal compliance with the existing regulations and laws. Cyber security policies ensure that all individuals work harmoniously to abide by the existing policies. Despite emerging trends of cyber attacks, policies remain a crucial segment since they provide a foundation for finding the solution.
Cyber attacks in the insurance sector have increased exponentially in the previous years. However, cybersecurity experts have assisted the global sector in countering such instances (Christen et al., 2020). At the same time, these experts have assisted the authorities in formulating crucial cyberattack policies. According to Markopoulou et al. (2019), every activity around the globe relies on insurance as a safety measure and legal requirement for the organization's security. In this case, cyberattackers know such information and target industries expecting significant financial gains. However, with appropriate cybersecurity policies, organizations may prevent such scenarios.
The European Union has created a holistic and coherent cyber policy to address cyber risks. Notably, the policy aims to ensure a stable and secure cyberspace grounded in the EU's rule of law and core values. In addition, the EU developed a Cyber Solidarity Act to prepare, detect, and address large-scale cyber security attacks and threats to different sectors. In this case, this paper seeks to determine the impact of cyber security policy on insurance industries in the European Union.
The aim of this paper is to:
* To establish if the EU's Insurance industry experience cyber-attacks.
* To determine how the EU cyber security policy is effective in the insurance industries.
* To ascertain whether Cyber Security Policy affects the insurance sector's security issues positively or negatively.
Assessment of the EU Situation
Insurance industries in the EU are at a greater cyber security risk, especially during emergencies. Notably, insurance companies began due to the need to provide financial protection during unexpected losses or events (EIOPA, 2021). Therefore, many people seek this financial cover with huge amounts of money and personal data. For instance, insurance companies were crucial during the COVID-19 pandemic in covering their customers' medical costs. However, there were frequent cases of internal and external cyber-attacks. In brief, significant flaws exist in combating cyber security risks in the EU.
Technological issues are one of the reasons the EU's insurance industries have not fully adapted to the current insurance policies. A vast technological resource is needed to digitalize financial sectors like insurance companies (Mishra et al., 2022). In addition, each technological resource has a global requirement to fulfill before it becomes safe for users (Fahey, 2022). For instance, insurance industries must establish and comply with clients' data policies to ensure the safety and security of the information. Due to numerous cases of cyberattacks, the EU has provided policies and legal frameworks to solve cybercriminal cases in insurance industries (Budde et al., 2023). Therefore, these policies are the foundation for solving cybersecurity threats, a global issue.
From early 2019 to mid-2020, The European Union Agency for Cybersecurity (ENISA), a cyber-security agency in the EU, reported more than 200 000 cases of new malware per day (Chiara, 2022). In support of ENISA, Europol's assessment establishes a significant rise in organized and serious crime threats in the EU since the onset of the COVID-19 pandemic (Brandão & Camisão, 2022). This rise in cybersecurity threats results from heavy transactions from insurance health industries. Therefore, these heavy financial transactions attracted the attention of organized cyber criminals exposing these industries to potential attacks (Backman, 2022). In brief, 2019 and 2020 was significant period towards a great transformation of EU's insurance policies.
The cyber security risks during the pandemic made the EU parliament discuss new measures to combat cyber security threats. Global cybercrime increased tremendously during COVID-19 due to work-from-home measures (Papakonstantinou, 2022). Therefore, most transactions occur without firewall protection, compromising clients' data privacy. Due to this scenario, the EU parliament agreed to form harmonized policies to avoid potential threats to crucial sectors such as the insurance industry (Farrand & Carrapico, 2022). The EU parliament based this agreement on the balance between digitalization, data privacy and policies, and security requirements to ensure a safe and sustainable environment for EU social and economic welfare.
State of Art
The EU cyber security policy aims to develop technological and industrial resources, enhance cyber defense capabilities and policies, reduce cybercrime, and attain cyber resilience for security (Dunn Cavelty et al., 2023). In addition, these policies also aim at creating a comprehensive global cyberspace policy for promoting EU core values. Equally important, the policies also support the EU's diplomatic reaction to cyber-attacks. In this case, the policy permits the EU to enforce target sanctions to respond to and deter external threats. Therefore, these policies have great potential to achieve a safe and sustainable environment.
The EU Cyber Solidarity Act
The European Commission suggested this Act in April 2023. Notably, this Act aims to enhance response, detection, and preparedness to cybersecurity issues in the EU (Budde et al., 2023). Equally important, this proposal entails a comprehensive Cybersecurity Emergency Mechanism and a European Cyber Security Shield to enhance the EU's cybersecurity environment.
Cybersecurity Emergency Mechanism
The Cyber Emergency Mechanism ensures the EU improves response and preparedness to cyber security threats. This mechanism enhances action preparedness by testing healthcare, energy, financial and insurance industries for possible cybersecurity weaknesses (EIOPA, 2021). In this case, the UE selects sectors that undergo this test through the EU's common risk assessment (Dunn Cavelty et al., 2023). Besides, the Cybersecurity Emergency Mechanism also creates the Cyber security Reserve for the EU, a private service provider. A member of the EU can deploy these providers whenever they need cyber security incident response to address the issue at stake (Farrand & Carrapico, 2022). Lastly, The Cyber Emergency Mechanism also promotes mutual assistance between member states which has encountered cybersecurity issues.
European Cyber Security Shield
The European Cyber Shield comprises the entire EU's Security Operation Centers (SOC). In addition, the EU establishes these SOCs with assistance from Digital European Program (DEP) to assist in national funding. Most importantly, the SOC's role is to respond, analyze and detect cyber threats (Papakonstantinou, 2022). In this case, the SOCs must use unique and advanced technology, including data analytics and Artificial Intelligence (AI), to share warnings with authorities and detect potential threats (Backman, 2022). Therefore, this policy which the EU launched in 2022, has potential gains if they adopt it fully.
The EU Cybersecurity Act
The EU amended its Cybersecurity Act in April 2023 with a target of adopting a European certification scheme. The areas of certification to which this Act applies include security consultancy and audits, penetration testing, and incident testing. Notably, this certification ensures that the provision of insurance services has maximal reliabil...