‘Cyber insurance’ has been the buzz word lately, especially after the recent #WannaCry ransomware attack that affected more than 2,00,000 computers across 150 countries. The malware that globally affected hundreds of thousands of computers would have been minimised if the companies had opted for a cyber-insurance.
Let us first understand what cyber insurance is.
Cyber insurance covers consumers of technology services or products. More specifically, the policies cover a variety of both - liability and property losses that may result when a business engages in various electronic activities like online selling of products, exchange of data and services and so on.
In addition, most importantly, cyber policies cover liability for a data breach in which the client’s personal information such as social security or credit card numbers is exposed or stolen by a hacker or other criminal who has gained access to your electronic network.
What does it cover?
· Investigation: A forensics investigation is necessary to determine the cause of cybercrime and find out how to prevent reoccurrence of such cybercrimes. Investigations may involve the services of a third-party security firm.
· Business losses: A cyber insurance policy include risks that are covered by an errors & omissions policy (errors due to negligence), monetary losses experienced by network downtime, business interruption, data loss recovery and costs involved in managing a crisis.
· Privacy and notification: This includes data breach notifications to customers and other affected parties.
· Lawsuits and extortion: This includes legal expenses associated with the theft of confidential information and intellectual property, legal settlements and regulatory fines. This also includes the costs of cyber extortion such as from ransomware.
How much premium is charged?
Currently, the total premium collected under cyber insurance policies is around Rs.60 crore. The size of cybercrime covers sold in India begin somewhere between Rs.15 crore and the premium ranges from Rs.15 lakh to Rs.1 crore based on the size of the cover and risks involved.
A few general insurance companies such as Tata AIG, HDFC Ergo, Bajaj Allianz and ICICI Lombard provide cyber insurance policies.
Size and scope of cyber insurance
So far, insurance companies have sold only 200 cyber insurance policies in India. However, experts believe this number is surely set to rise considering the recent cyber-attacks. Global ratings agency, Fitch, believes, “The recent ransomware attacks in more than 150 countries are likely to increase demand for related insurance protection as they reveal the widening scope of corporations’ cyber risk exposures.”
Speaking about the scope of cyber insurance, Krishnamoorthy Rao, CEO, Future Generali Insurance India believes, “Every company in the future, irrespective of the size of the firm, using technology for its operations will require cyber insurance to protect their businesses from online threats that is not covered in general insurance.” Future Generali is in the process of filing a cyber-insurance product with the regulator.
Insurers and advisers should conduct awareness programs relating to cyber risks and data security to sell cyber insurance to their clients, believes Rao.