Virtual is the new way of life. Individuals and corporations have moved online for even the most basic activities — be it news, entertainment, health, or shopping which has resulted in the increased importance of cyber risk insurance in India.
Online modes have also come into the picture for purposes of communication and the exchange of information. It is also the same for buying and selling products and services. Financial transactions, including money transfers, investment, and banking, have primarily gone online.
However, we need to ask ourselves how safe is the cyber world? What are the risks we face daily when we are online? What is the current propensity of cyber fraud in India? And do we really need cyber insurance? Or is this a western fad that we can bypass? Read on to know more.
Importance of cyber insurance in India
Indian corporations are adopting technology in all their operations. And it’s helping to streamline processes, drive performance, reduce transaction time and improve productivity. However, all this comes with the fear of online data theft and other cybercrimes.
According to a recent cyber risk survey (Allianz Risk Barometer 2019), the biggest risk for India Inc is cybercrime. This poses more danger than other conventional issues like regulatory changes, market developments, and increasing competition.
Symantec, a global cybersecurity leader, has reported that India witnessed a 457% growth in cybercrime in the last half a decade. India ranked second in the list of nations most affected by cybercrime and related threats between 2016 and 2018.
Because of these reasons, cyber insurance has become increasingly important for an entity or individual operating in India.
Growth of cyber insurance in India
India is a new adopter of cyber insurance. However, this form of insurance has made its presence felt in the country in a short span. The possible implication of GDPR and Personal Data Protection Bill too has fuelled its adoption and growth.
As per a Data Security Council of India (DSCI) report, instances of corporates buying cyber insurance policies grew 40% between 2017 and 2018.
The Economic Times has also covered this cyber insurance report. This also shows that all businesses — large, small, and medium enterprises — are highly vulnerable to cyber-crimes today.
Similarly, a December 2019 PWC-DSCI report titled ‘Cyber Security India Market – What Lies Beneath’ corroborates that the need for cybersecurity in India is rising faster than in other parts of the world. Read the full report here.
The IT, ITES, Banking, and Financial Service sectors are among the main seekers for cyber insurance. Other industries that have shown interest in this type of policy include pharma, retail, manufacturing, hospitality, and R&D.
Here are some key facts about cyber insurance:
The cyber insurance industry is pegged to grow at 27% (CAGR) and reach a valuation of $22.8 billion in the next five years. This growth rate is significantly faster than most other insurance products, indicating the growing awareness and need for cyber insurance among decision-makers, experts, and users.
Cyber insurance policies cover regulatory aspects such as legal expenses, costs for defense, and penalties. It also covers different liabilities – first party, third party, and multimedia. A cyber insurance policy bears the costs incurred in case of a digital theft or data breach, – including expenses for resolution, crisis management, and other mitigation activities. Moreover, the policy covers losses due to business interruption or additional expenses arising from system failures or even voluntary system shutdowns in the event of a breach.
Finally, cyber insurance protects you from the threat of cyber extortion and pays for data recovery expenses and counseling treatment services.
Both individuals and corporations can buy cyber insurance policies.
Cyber insurance policies often have clauses, each of which has a sub-limit. For instance, claims related to phishing or e-mail spoofing cannot exceed a predetermined percentage. Alternatively, each clause can have a fixed amount, and the insured needs to bear expenses exceeding this figure.
Cyber insurance does not cover claims for injuries or damage to property caused as a result of a cyberattack. Also, any claims that can be traced back to unsolicited communication are not covered.
Cyber insurance should assume a critical proportion in all risk management strategies. It may not be able to safeguard your entity from hackers or cybercriminals but it can take care of financial losses or expenses in case of such eventualities.
SecureNow provides a well-selected individual and family cyber insurance policy product available to view online. You can understand the product features, coverage and exclusions, and the premiums payable at different levels of coverage. You can also buy the product from us.