Fear being hit by a cyber fraud? Here is how the insurance regulator has planned for your protection

Soon, you could have more retail cyber insurance products to choose from. The Insurance Regulatory and Development Authority of India (IRDAI) has come out with model cyber insurance policy guidelines that it expects general insurers to adopt, even if they already offer cyber policies. The insurance regulator highlighted the need for introducing cyber insurance cover in the backdrop of the COVID-19 pandemic, pointing to the increase in cybercrimes during the period. Cyber risks have risen by 500 percent since March 2020, the circular noted.

Companies such as Bajaj Allianz, ICICI Lombard and HDFC ERGO offer such policies to individual policyholders at present.

"General insurers who have already developed some cyber insurance products with exclusive coverage for individuals to protect against cyber perils and currently offering the products that mainly focused on commercial business, may review the product structure based on the coverages advocated in the document," the circular said. However, the IRDAI has also said that the purpose was to provide a reference framework and that the coverage options highlighted in the guidelines are indicative.

“Considering the dire need for cyber insurance among individuals, the IRDAI has charted out some salient features, coverages and suggestions in its guidance document on product structure for cyber insurance, which insurers can look to adopt.  This document also talks about simplifying the existing products further and expanding their scope of coverage. Cyber risks are continuously evolving…we will keep upgrading our product depending on the changing risk environment and requirement of our customers,” says TA Ramalingam, Chief Technical Officer, Bajaj Allianz General Insurance.

Here is a list of key cyber risks that such policies will cover:

Theft of funds

The product will provide protection in case of theft of funds due to hacking of the insured’s bank accounts, credit or debit cards and mobile wallets.

Unauthorised online transaction 

If your credit, debit cards, bank accounts or e-wallets are misused by fraudsters to make online purchases, the cyber insurance policy will come to your aid.

Identity theft cover 

It will cover the costs incurred by policyholders for defending claims made by a third-party who has been adversely affected due to the identity theft. It will also reimburse expenses incurred to bring the perpetrators to book.

Social media cover

The policyholder will be insured against defence cost of claims made by affected third parties – individuals who have had to incur a loss after interacting with your hacked social media accounts. Again, this will cover expenses incurred to prosecute the scammers.

Cyber-bullying/stalking/extortion covers

Likewise, the cyber-bullying cover, too, will reimburse expenses incurred to take legal action against the stalker. Financial losses due to cases of extortion, along with legal expenses incurred to get the culprits to face the law, will also be covered.

Malware cover/ data restoration cost

If you have to shell out money to get your data restored post a malware attack, your cyber insurance policy will chip in with the reimbursement.

Phishing cover 

Any financial losses due to phishing as also cost of prosecuting the fraudsters will be taken care of by the product

Data breach and privacy breach cover

These covers will pay for defence costs as well as damages in case of claims against policyholders lodged by individuals affected by data breach on your devices.

"Such covers are relevant for senior citizens in particular, who may not be conversant with carrying out financial transactions online. Many have smartphones today and often receive fraudulent links through their WhatsApp groups. They tend to walk into the traps more easily than younger individuals. Premiums are affordable too, but you should be mindful of multiple conditions and sub-limits," says Mahavir Chopra, Founder, Beshak.org, a research platform for individual insurance consumers.

For example, phishing coverage is often limited to 15-25 percent of the sum insured chosen. Sums insured under products available today range from Rs 50,000 to Rs 10 lakh.