Demand for cyber insurance cover jumps 50%

MUMBAI: About 250 companies, including some of the top staterun banks, have bought cyber insurance cover, which is 50% more than what was sold in the past year. With rising attacks, insurers expect robust future demand for cyber risk insurance in India.

Today, cyber risk is the most discussed risk topic-area in board rooms. Marsh India, a Mumbai-based insurance broking firm with a large share in the cyber segment, saw a 50% increase in companies buying cyber security cover in 2017 compared with 2016.

Cyber liability insurance has been around in the international markets for more than a decade. However, Indian insurers have started writing this business for only three years now. It covers losses arising from a cyber attack or incident of data breach. Mostly banks and ecommerce companies have been buying large covers.

The size of cyber insurance premium is Rs 200 crore. It is expected to grow to Rs 400 crore in the next couple of years. There is huge demand for cyber insurance policies after the telecom revolution and various initiatives have pushed increasing digitisation of the economy. “Cyber insurance is going through a similar phase of active dialogue which we saw for Directors’ and Officers’ liability insurance in India 15 years ago,” said Sanjay Kedia, country head, Marsh India.

“One major difference though is that the cyber risk incident is on the rise at a much faster pace, and the nature of risk is far more dynamic and possibly explosive in many situations.” In 2017, public sector lender Union Bank of India was hacked and a whopping $171 million was debited from the bank’s account through Society for Worldwide Interbank Financial Telecommunication or SWIFT payments without the bank’s authorisation.

The money was retrieved after the bank acted with the help of government agencies. In 2016, card data of 3.2 million customers was stolen from a network of Yes Bank ATMs managed by Hitachi Payment Services. Banks in India had to reissue cards and faced a combined loss of more than $2 million after hackers allegedly penetrated the system that carried out the processing of ATM transactions. There have been cases of mobile phone applications of banks being hacked by cyber-criminals. The pilferage of personal information and money in digital wallets has cost banks crores of rupees.