Benefits of Cyberinsurance

In other areas, such as fire protection, insurance has helped align private incentives with the overall public good. A building owner must have fire insurance to obtain a mortgage or a commercial business license. Obtaining insurance requires that the building meet local fire codes and underwriting standards, which can involve visits from local government and insurance company inspectors. Insurance investigators also follow up on serious incidents and claims, both to learn what went wrong and to guard against possible insurance abuses such as arson or fraud. Insurance companies often sponsor research, offer training, and develop best-practice standards for fire prevention and mitigation. Most important, insurers offer lower premiums to building owners who keep their facilities clean, install sprinklers, test their control systems regularly, and take other protective measures. Fire insurance markets thus involve not only underwriters, agents, and clients, but also code writers, in-spectors, and vendors of products and services for fire prevention and protection. Although government remains involved, well-functioning markets for fire insurance keep the responsibility for and cost of preventive and protective measures largely within the private sector.