Cyber insurance: A must in this digitized world

By Rakesh Goyal, Director, Probus Insurance Broker Limited

Cyber-attacks are not unknown phenomena especially with the growing technology in India and the global markets. Despite, some precaution we have seen few cyber-attacks in the country in the past 10 days. One being a Pune bank based losing around 90 crores in a digital fraud, while in another fraud engineering company was attacked by cyber criminals and made fraudulent transfers of around 20 lakhs.

Once again, all these cyber-attacks bring cyber insurance to the core. How it is important for each and every company small or big to have a proper cyber cover-so those losses can be prevented. Not only companies but with rising cyber frauds even individuals should also look at having a cyber insurance cover.

In global markets, we have seen rise in cyber insurance market which is slated to touch $20 billion by 2025, but in India-we haven't seen a major uptick in the space. Few financial companies have taken the cyber insurance cover but have chosen low sum assured which impacts their financials. While global markets are all gearing to face the cyber challenge, Indian base for cyber insurance is around Rs 200-300 crore.

In the year 2017, we had seen few of the public sector banks which had fell victims to cyber frauds. With the rise of digital transformation in India, cybersecurity remains one of the top challenges for several organizations. As we have seen in the recent attacks that, they are more specific in nature which causes not only huge losses but also impacts values and trust in the brand. So it is more important for corporate and mid sizes companies to have adequate cyber insurance cover, so that risk can be mitigated through such cover.

This is not to do with only financial companies or manufacturing companies, but this product is also for insurance companies. There are several insurers who sell health insurance plans, vehicle insurance, travel insurance and other insurance products. This is because insurers have some of the personal information of the policyholders which can be misused by the hackers or by cyber-attacks.

Several of the insurers provide cyber insurance cover to individuals as well as companies. Typically, identity theft, social media liability, cyber stalking, IT theft loss and cyber extortion among other factors are included in the cyber insurance policy. Globally and in India, most cyber-attacks include e-mail based attacks, malware or ransomware and phishing attacks. The notion among some players is that this policy might be costly, but premium rates of cyber insurance are very competitive, and it will cost around Rs 600-800 per lakh of sum insured.

However, like any other insurance cover, one should look at exclusions before buying the policy as it includes, immoral services, dishonest and improper conduct among other exclusions. For insurers, cyber insurers are still under-penetrated and there is big scope to tap this market. From the companies’ point of view, cyber risk should be part of the broader risk strategy of the company. They should have proper controls in place and how risks managed even after cyber policy can is bought.