Tag: Cyber insurance

All you wanted to know about cyber insurance

Personal Finance

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Two neighbours’ daily routine of watering plants leads to an interesting conversation

Sindu: I got an email for buying quality seeds online and I was giving all the details, because I thought it was a reputed source. But I ended up losing money. I didn’t even know it had happened until it was too late! But, I think my insurance will cover for this.

Bindu: What? There is insurance against online scams?

Sindu: Yes, cyber insurance. It protects businesses and individuals against online risks such as data breach, identity theft and unauthorised transactions. It covers financial losses depending on the cyber incident. For instance, if you are a victim of unauthorised online transaction and as a result you have lost money, then cyber insurance will cover you up to the sum insured. Provided the money lost is not recoverable, legally.

Bindu: Okay. Does it provide any other coverage?

Sindu: Yes. Now, if you take it to court to fight a legal battle, then the policy also covers cost incurred in prosecuting a criminal case and other legal expenses related to the cyber-attack.

Further, it also covers the cost of employing IT services to recover the lost data.

Bindu: This is good news! But you know, even if the losses are covered, these cyber attacks affect you mentally.

Sindu: Guess what? If policyholders require medical counselling, insurers do offer to cover the cost of the same, up to the sum insured.

Bindu: Wow! Looks like it is a must have.

Sindu: It may appear so. But cyber insurance policies have their own limitations. They come with sub-limits, deductibles and waiting periods that usually vary with cyber threats and with each insurer. Policyholders are expected to adhere to certain protocols such as constant updating of software.

Bindu: Update the system? So what happens at the time of claim, otherwise?

Sindu: Well, post the cyber attack you should inform the insurer. Now, if you fall behind on your due diligence such as software update, installing anti-virus or other such protection software , you may not be able receive your claim. One of the most important points to note is that, a policyholder can claim only for one event, even if the one event, say, malware attack, triggers multiple events such as hacking, phishing or unauthorised transactions.

Bindu: I knew it! It was too good to be true. But at least, we have many options.

Sindu: No, in India only a few insurers offer this product. These are new to the industry and yet to evolve and widen the scope of coverage.

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More companies opting for cyber insurance, hiking limit: Bharat Re Insurance Brokers

Banking & Finance

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More and more companies are taking up cyber insurance in recent years and those with existing policies are looking to hike their covers, said TL Arunachalam, Director and Head, Cyber and Emerging Risks Practice, Bharat Re Insurance Brokers.

“There has been a good response to cyber insurance in the last two to three years, It has been growing in two aspects — those who had bought a cover in the past are looking for increased limits for insurance. There are also new buyers in sectors apart from banking,” he told BusinessLine.

Companies in sectors like manufacturing, pharmaceuticals, e-publishing and service providers are also now buying cyber insurance, he said.

While companies with clients in Europe or the US now insist on having cyber insurance before any business activity takes place, there has also been an increase in incidences of ransomware, especially during the pandemic, he said.

Most companies in the banking and insurance sector had been taking cyber covers in recent years but other corporates had been slow to adapt, according to industry watchers.

The Insurance Regulatory and Development Authority of India too had recently noted that the economic situation owing to Covid-19 pandemic has seen an exponential increase in cyber attacks across the globe and, in particular, the financial sector. The IRDAI has also formed a committee now to review its insurance and security guidelines.

Meanwhile, commenting on the pandemic and its impact on businesses, Vijay Thyagarajan, Principal Officer and CEO, Bharat Re Insurance Brokers, said it has highlighted the need for business interruption cover.

“Business interruption cover was not being bought even before Covid. The cover should not be looked at only from the point of view of a pandemic,” Thyagarajan said, adding that business interruption could happen even due to other accidents like fire or a flood.

“People are slowly realising this,” he noted, adding that Covid has highlighted that business interruption is a real possibility.

Most business interruption covers globally do not cover the non-damage interruptions such as the Covid-19 lockdown.

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IRDAI panel not in favour of standardisation of cyber insurance, BFSI News, ET BFSI

Banking & Finance

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An IRDAI working group has opined against standardisation of cyber liability insurance as it might impede innovation and hinder adaptation to evolving industry needs. In October last year, the Insurance Regulatory and Development Authority of India (IRDAI) had set up the working group to study cyber liability insurance and suggest among things, possibility of developing standard coverages, exclusions and optional extensions for various categories.

Cyber insurance policy is a risk transfer mechanism for cyber risks.

The panel, as per its report published by the regulator, examined various aspects relating to cyber insurance in India, including coverage issues, sector wise exposures, underwriting/ pricing methodology, and claims response and management to come to an informed conclusion on standardisation.

“The Working Group believes that early standardisation of cyber insurance in India, might impede innovation and hinder adaptation to evolving industry needs. It may lead to price-based competition instead of developing competencies for agility to design new products suitable to new environments,” the report said.

It further said that while standardisation of cyber insurance policy seems to be a very good approach, at present it faces many challenges. Cyber insurance is a response mechanism to cyber risks which are dynamic and evolving.

Standardisation may not be able address all the emerging risks and is likely to limit innovation, said the report on which IRDAI has invited comments by February 9.

“Cyber insurance, at present, is much dependent upon support of reinsurers who instead of a standardised wording may prefer to use coverage and exclusions as per the latest developments in the market,” said the report, and added that cyber insurance, being a relatively new product, calls for flexibility for gaining traction.

The report also noted that cyber insurance policies, currently available, address the requirements of individuals reasonably well.

But, there are some areas in the product features and processes which need improvement.

It has recommended that there should be flexibility with regards to insistence of an FIR at the time of claims. It also suggested there should be clarity in exclusion language relating to compliance with reasonable practices.



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