  Efficient risk transfer is an important condition for ensuring the
sustainability of a market according to the established economics literature.
In an inefficient market, significant financial imbalances may develop and
potentially jeopardise the solvency of some market participants. The constantly
evolving nature of cyber-threats and lack of public data sharing mean that the
economic conditions required for quoted cyber-insurance premiums to be
considered efficient are highly unlikely to be met. This paper develops Monte
Carlo simulations of an artificial cyber-insurance market and compares the
efficient and inefficient outcomes based on the informational setup between the
market participants. The existence of diverse loss distributions is justified
by the dynamic nature of cyber-threats and the absence of any reliable and
centralised incident reporting. It is shown that the limited involvement of
reinsurers when loss expectations are not shared leads to increased premiums
and lower overall capacity. This suggests that the sustainability of the
cyber-insurance market requires both better data sharing and external sources
of risk tolerant capital.
