From Pandemic to Cyber War, Clear Policy Wording is key for Insurers
Amid the Covid-19 Pandemic, most of the Tech firm employees were working from home just like other industries. The advantage of this state was taken and utilized by cyber hackers at its most significant level. The hackers became rampant and started infringing on the device by infiltrating and stealing data. As a result, the cases of cyber crimes, such as hacking and ransomware showed an instant increase, and the number of claims for D&O and cyber insurance policies increased.
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From Pandemic to Cyber War, Clear Policy Wording is key for Insurers
Clear Cyber Insurance Policy Wordings
Clarity in terms of policy wordings mentioning the cyber insurance term and conditions helps both the insurer and the insured.
If the insured has an understanding of the policy wordings then it is helpful at the time of raising a claim and during claim rejections. Further, it is crucial to have clear policy wordings to make it precise and unambiguous for both the parties i.e. the policyholder and the insurance provider. In addition, the insurer can explain the claim rejection for unnecessary liabilities as per the insurance contract, if the claimant already has some knowledge.
Why is Clear Policy Wording Important?
Due to the Covid-19 pandemic and the Russia-Ukraine war, the apprehension of cyber attacks is at its peak. Indian companies have become the soft target of cyber attacks. The ransomware attacks have made Indian firms endeavor to survive through these threats and broken the backbone of their backup.
As a result, Indian insurance companies have also increased the premium prices of cyber insurance policies. They have made several deductions in the cyber insurance policy coverage to reduce the loss ratio incurred since the Covid-19 pandemic and lockdown.
The insurance holders also raised several objections against the deduction of claims and rising cyber insurance policy premiums. They even felt cheated by the insurance companies and demanded more coverage due to the hike in cyber threats. In addition, the companies providing cyber insurance policies stepped down from covering ransomware attacks.
However, several terms and conditions violated the coverage policies written down in cyber insurance policies either expressly or impliedly. Hence, under these circumstances, it becomes crucial for the insurer and the insured to embrace clear policy wording to avoid future wars and cyber attacks.
Let us understand why clear policy wording is crucial for the insurer and insured and how it will be a path forward in dealing with concern about the future.
How will Clear Policy Wording help in Dealing with future Claims?
There have been several stances where the insurer has regretfully stated to the insured how the company is not bound to pay for certain losses. Insurance companies are inclined to provide business interruption coverage during Covid-19.
Hence, in the absence of clear policy wordings under a cyber insurance policy, the insured and insurer sometimes undergo several issues pertaining to claim settlement. Therefore, policy wordings should have simple language to ensure that the buyers have a proper understanding of policy inclusions, exclusions, premiums, documentation, claims, etc.
Clear policy wording eliminates the ambiguities and disputes, and provides the preferable guidelines for the insured and the insurer while settling the claim of the cyber insurance policy. Therefore, it is vital for both parties to pen down these clauses before entering into the cyber insurance policy contract.
Written By: PolicyBazaar - Updated: 19 January 2023
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4.3 October 06, 2022
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4.5 March 18, 2022
Cloud Storage Cover
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