Cyber Insurance

A cyber insurance policy is a type of insurance policy that provides cover to the company for any kind of loss or damage caused by the hackers to either property of the company, data breach, or any fraudulent act that led to the loss of customers data on the internet. A cyber-attack can cause moderate to extreme loss to an individual as well as small and large entities.

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What is Cyber Security Insurance?

It offers compensation for expenses, fees, and legal costs arising due to cyber breaches. It also includes the loss or theft of the client/employee information due to the hacking of the organization’s data. Unauthorized access is a common example of a security breach. This is where the role of cybercrime insurance comes into play.

Data security is one of the primary responsibilities of companies as they have access to their customers’/users’ private & confidential information. Having cyber insurance in India is a must for such companies.

Why Cyber Insurance Is Important?

Today, various organizations rely on Internet-based technology to reach out to their prospective customers and pursue their digital marketing goals. All digital tools expose these organizations to the risk of cyber threats.

All the business organizations or companies that are directly or indirectly involved in online payment transactions, customer data management, information storage, use of payment gateways, or cloud services should consider buying cyber insurance in India.

Amid the proliferation of smart devices connecting to vast business networks, the risk for malicious attempts on an organization's assets is even higher. As a part of their risk mitigation plan. Cyber insurance in India is a measure of countering risks to neutralize cyber risks.

Cyber Insurance Statistics so far…

As per the Data Security Council of India (DSCI), in 2018 there has been a 40 percent rise in Cyber insurance purchases in India. Cyber threats are on a constant rise and the associated risks are provoking the organizations to get cyber insurance cover to offset financial liabilities that may arise due to any breach.

As per the report, the cyber insurance market is expected to grow globally at a CAGR of 27 percent from INR 29,400 in 2017 to INR 1.59 lakh Crore in 2024.

Features and Benefits of Cyber Insurance

The main features and benefits of a cyber-insurance policy are enumerated below:

  • Protection against cyber threats and cyber crimes
  • Financial cost coverage
  • Unique plans to offer coverage to individuals
  • Safeguards big and small organizations from crippling down due to the damage caused by a cyber-attack
  • Ensures cyber safety and security
  • Easy online purchase facility

What Is Covered Under Cyber Insurance?

The cyber insurance policy provides cover for the following:

First-party liabilities

  • Any loss or damage to the transferred funds or property of the company online.
  • Any loss or damage due to any fraudulent activity through the online network or breach in a computer system.
  • Any loss or damage to the customer transferring funds online after an e-communication with the customer service.
  • Any loss or damage due to any fraudulent communication for which the company is held legally liable.
  • Loss or damage caused in an extortion payment that includes professional negotiator cost, payment made to the extortionist, any fund transfer, etc.
  • Any online vandalism caused by the employee of the company.
  • Interruption in the online business including any extra expenses.
  • Any financial loss due to crisis including the cost of public relations consultants.

Third-party liabilities

  • Any loss caused to the customer due to system security failure, disclosure liability that resulted in unauthorized access to or leakage of any private information of the customer on the internet
  • Any loss caused by copyright infringement, trademark infringement, the liability of content as well as a claim for property
  • Any loss caused by libel, slander, reputational liability, privacy invasion, etc.
  • Any loss caused by claim arising due to system failure that led to harm third-party systems, conduit liability.
  • Impaired access liability including claims because of security system failure that led to systems not be available to customers.
  • Cost of defending any kind of claim brought by the government.
  • Extradition proceeding defining claims

What Is Not Covered Under Cyber Insurance?

Cyber insurance does not provide cover for the following:

  • Bodily injury, diseases, death or damage to any tangible item is not covered
  • Electric disturbance, mechanical failure, breakdown of any kind or media failure that led to any kind of loss is not covered
  • Any circumstances or prior notice of the last insurance provider is not covered
  • Any valuable information possessed by any insured person except the CEO, COO, CFO is imputed by the company.
  • Any willful or fraudulent act of any law, rules or regulation by an insured.

Tips to Enhance Cyber Security

Mentioned below are some of the tips to enhance cyber security and effectively prevent cyber risks:

  • Follow effective cyber security measures. Instantaneously respond to threats and stop it then and there with an appropriate anti-malware.
  • Allocate cyber insurance costs in your company’s budget.
  • Enhance cyber security expertise and take measures to bolster security.
  • Ensure security and productivity by providing employees with devices that they know how to operate and function.
  • Boost security measures with an adequate cyber insurance policy to ensure uninterrupted business operations.