What is Cyber Insurance and why it is the need of the hour

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Rakesh Goyal

With the rise of digitization in India comes the rise in threat of cyber-attacks. In the past few years we have seen numerous cyber-attack both for corporates as well as individuals. Cyber-attacks are not unknown phenomena especially with the growing technology in India and the global markets.

Once again, all these cyber-attacks bring cyber insurance to the core. A cyber insurance policy is also known as cyber risk insurance or cyber liability insurance coverage. This policy is designed to help an organization mitigate risk exposure by offsetting costs involved with recovery after a cyber-related security breach or similar event.

Nowadays even Indian insurers offer products for individuals for cyber-attacks. So, why it is important for each and every company - small or big - to have a proper cyber cover - so that losses can be prevented. Not only companies, but with rising cyber frauds even individuals should look at having a cyber insurance cover.

In global markets we have seen rise in cyber insurance market which is slated to touch USD 20 billion by 2025. But in India-we haven't seen major uptick in the space. Few financial companies have taken the cyber insurance cover but have chosen low sum assured which impacts their financials.

While global markets are all gearing to face the cyber challenge, Indian base for cyber insurance is around Rs 500-700 crore.

With rise of digital transformation in India, cyber security remains one of the top challenges not only for organizations but also for individuals. We have come across many millennials doing most of their financial activity through their mobile phone and for them buying a cyber security cover is very important. It is more important for corporates and individuals to have adequate cyber insurance cover, so that risk can be mitigated through such cover.

Several of the insurers provide cyber insurance cover to individuals as well as companies. Typically, identity theft, social media liability, cyber stalking, IT theft loss and cyber extortion among other factors are included in the cyber insurance policy. Globally and in India, most cyber-attacks include e-mail based attacks, malware or ransomware and phishing attacks. The notion among some players is that, this policy might be costly, but premium rates of cyber insurance are very competitive, and it will cost around Rs 600-800 per lakh of sum insured.

In the recent annual threat report for 2019 published by Quick Heal shows that states such as Maharashtra, Delhi, West Bengal and Gujarat among other are top states where cyber-attacks were most targeted. However, like any other insurance cover, one should look at exclusions before buying the policy as it includes, immoral services, dishonest and improper conduct among other exclusions. For insurers, cyber insurers is still under-penetrated and there is big scope to tap this market. So like individuals buying life or health policy for their well-being it is also important to buy cyber cover for their financial security.

The author is Director, Probus Insurance Brokers Pvt. Limited, a Tech Solution Provider that provides solution for all insurance related queries and needs.