Cyber insurance gains traction amidst Covid pandemic

MUMBAI: As companies see most of their employees working from home for next few months many of them are opting for cyber insurance to hedge the risk of data breach and disruption.

Industry experts say that many cybercriminals are specifically targeting organisations to steal data and or gain access to certain sensitive information that can be used to extort money from the company. Industry trackers say that many large corporations were also targeted by ransomware during the lockdown.

Cyber criminals are exploiting this opportunity to hack into organisations, exfiltrate data, cause network disruption etc. Over 8 billion data records were compromised in Q1 of 2020[1] and such incidents have only paved way for cyber insurance amongst organisations looking to minimise the loss due to cyber incidents and data breaches,” a KPMG research by Sony Anthony and Kailash Mittal, Partners in the firm said.


Experts point out that work from home has also impacted some sectors more than the others. Some top European banks and companies that outsource work to their captives or to BPOs in India are either recalling jobs or deferring contracts fearing data leaks as most employees continue to work from home amidst the Covid-19 pandemic.

Europe accounts for about 30% of India’s $150 billion outsourcing industry. European companies and banks fear that a data leak in India could end with steep penalties back home in Europe due to strict data protection laws.
General Data Protection Regulation or GDPR prescribes how companies that deal with data of EU citizens could handle and store it with third parties. The penalties for not doing so could be 4% of the global annual turnover or €20 million (about Rs 160 crore).

While most insurance products are based on decades of aggregated and actuarial data, assessing cyber risks and pricing cyber insurance products has been a little challenging because of the evolving cyber landscape and lack of historical data for actuaries to work with. Organisations are also facing challenges to quantify the cyber risks and decide on a suitable cyber insurance cover, the KPMG report added.