Lemons and Liability: Cyber Warranties as an Experiment in Software Regulation

Discover how cyber warranties are changing the software regulation landscape and learn about the experiment in liability that's forcing vendors to prioritize security and pushing them towards secure software development practices.

Key takeaways
  • Cyber insurance market emerges alongside infosec, with $11-$13 billion in coverage.
  • 25% of endpoint protection platforms now sold with warranties.
  • Warranties can be used to signal a product’s effectiveness, with buyers reporting higher satisfaction with products that offer warranties.
  • Cyber warranties are a costly signal for vendors to demonstrate their product’s security.
  • Warranties can be linked to implementing secure software development practices, such as secure coding and vulnerability disclosure policies.
  • Insecure software vendors may not offer warranties, as buyers are unable to distinguish between secure and insecure software.
  • Liability can help push vendors towards secure software development, but mandatory liability regimes also need to be considered.
  • Cyber insurance policies can sometimes be similar to warranties, with overlapping coverage.
  • CrowdStrike and SentinelOne warranties are narrower and linked to implementing their technologies properly.
  • Design space for software liability regimes includes parameters such as “safe harbors” and “liability limits”.
  • Cyber warranties may not be suitable for all infosec segments, such as traditional software vendors.