The "right to be forgotten" doesn't go far enough. We need mandatory insurance to protect online reputations.

Most importantly, it preserves the innovative spirit of the Internet. Internet companies wouldn't need to revamp their business models to accommodate the most exotic demands that are associated with “the right to be forgotten.” Likewise, ordinary users who may already be getting paranoid about their reputations wouldn't need to delete all of their online accounts or become digital hermits. Even if Anonymous discloses every single fact about their lives, they would at least get some monetary compensation.

Such online reputation insurance, of course, is no panacea. It's not meant to replace the rule of law as the primary tool for advancing public interest. Companies that are careless with user data should still be fined and prosecuted; users should feel responsibility for their data. But such an insurance scheme would offer a modicum of consolation to those of us pressed into the most Kafkaesque corners of the Internet.

Why make it mandatory? Shouldn't people who don't use the Internet get a waiver? Alas, one doesn't have to use the Internet to be violated by it. One can be tagged in an embarrassing Facebook photo without knowing anything about Facebook. Similarly, when Anonymous attacks the online databases of government agencies, every citizen is a potential victim.

Of course, as with every novel proposal, there are hundreds of details that need to be worked out. These, however, are not insurmountable challenges. In fact, some insurance companies—including giants like AIG—already offer similar “reputation insurance” to corporate clients. What's needed now is to make it affordable and useful to individuals by addressing some of the most pressing concerns.

For example, measuring or even defining “harm” to one's online reputation may be tricky. However, the growing quantification of our social status on the Web—where we are defined and assessed based on our online friends—may soon make it easier.

Some users might attempt to game the insurance scheme by distributing embarrassing photos of themselves in the hopes that one day they would get paid for it. Ensuring that high-risk individuals—those who have genuine accounts on many Internet platforms—are not discriminated against or overcharged by insurers may prove challenging as well. However, this problem of adverse selection can be overcome if the insurance program is administered by the government.

From an innovation perspective, it may actually be in society's best interest to have as many early adopters testing as many new Internet services. Thus, providing them with the most comprehensive online insurance may even be a worthy objective for public policy.

Failing to explore the benefits of insurance-based schemes while embracing vague but populist slogans like “the right to be forgotten” is a sure way to misguided Internet policy. Smart Internet policy, on the other hand, would preoccupy itself with maximizing "information welfare" and do its best to create and defend an "information welfare state." A digital safety net could help make the Internet more humane without harming innovation.