Published in Cafemutual on 7th April,2017
With the increase in online transactions and use of technology to manage confidential data comes the risk of cyber threats underlining the need of having cyber insurance policies. So, it is not surprising that companies and individuals with technology related operations and large quantity of customer data are now opting to take this cover.
Pavan Dhingra, CEO, Prudent Insurance Brokers believes, “We are all inter-connected through web and cyber threat exists in every industry. Traditional policies are inadequate to cover cyber risks. Data leakages arising from lost mobiles, laptops or hacking websites cost a fortune and require cyber insurance cover.”
So far, insurance companies have sold only 200 cyber insurance policies in India. Commenting on the reason for this meagre number, he said, “It will take a while for people in the industry to understand its exposure. As we progress to the tech era, the numbers of cyber cover will rise rapidly.”
Insurance brokers said that clients from the banking and financial services were active in the cyber space so far. However, with e-commerce firms on the rise, even sectors such as retail, hospitality and pharmaceuticals have shown interest in these covers, they said.
Citing the reasons for its wide applicability, Kapil Mehta, Co-founder, SecureNow said, “Almost everybody deals with electronic data, be it an individual or a corporate. The use of technology is growing rapidly and so are the cyber threats. So far, the industry might have received gross premium of close to Rs.50 crore but it will surely increase in time. Currently, general insurance is growing at 30% year-on-year; I expect cyber insurance to be doubling every year.”
Tanuj Gulani, Vice President – Specialty Lines & Reinsurance, Prudent Insurance Brokers said, “A host of liabilities arising due to cyber hacks like confidential information disclosure, legal expenses, technical damages, business interruption, security expenses and so on are all covered under cyber insurance. The product is around 4 years old and has recently gained popularity after the recent cyber-attacks on banks and other institutions.”
“IFAs should not only consider buying cyber insurance to protect their own business as they handle confidential information of clients but also recommend these policies to their clients who are exposed to such technologies,” added Gulani.
Currently, advisers can customize cyber insurance cover for their clients based on their needs by adding coverage for various components such as legal costs, reinstatement of data costs, fines and penalties and so on.