Smart Home Cyber Insurance Pricing

TL;DR

This paper introduces a new framework for pricing smart home cyber insurance, addressing the gap in assessing insurer profitability and fairness to homeowners amid increasing IoT device adoption.

Contribution

It presents a novel, practical framework for insurers to price smart home cyber insurance, highlighting issues of overcharging and proposing solutions.

Findings

Insurers tend to overcharge homeowners in premiums and deductibles.

The proposed framework can help insurers set more accurate and fair prices.

Case studies demonstrate the framework's effectiveness in real scenarios.

Abstract

Our homes are increasingly employing various kinds of Internet of Things (IoT) devices, leading to the notion of smart homes. While this trend brings convenience to our daily life, it also introduces cyber risks. To mitigate such risks, the demand for smart home cyber insurance has been growing rapidly. However, there are no studies on analyzing the competency of smart home cyber insurance policies offered by cyber insurance vendors (i.e., insurers), where `competency' means the insurer is profitable and smart home owners are not overly charged with premiums and/or deductibles. In this paper, we propose a novel framework for pricing smart home cyber insurance, which can be adopted by insurers in practice. Our case studies show, among other things, that insurers are over charging smart home owners in terms of premiums and deductibles.