Understanding the Concept of Cyber Insurance

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Understanding the Concept of Cyber Insurance
Sampurna Majumder - 09 April 2019

The World Economic Forum’s Global Risks Report 2018, co-authored by Marsh & McLennan Companies, ranks cyber attacks as the perceived global risk of highest concern to business leaders globally. The analysis suggests that the takedown of a single cloud provider could cause $50 billion to $120 billion of economic damage. While global figures show these, India is no exception.

India’s central biometric identification (Aadhaar) programme has been compromised multiple times and sensitive data has even been published online by third-party service providers, hackers, and even by government websites in recent times. As per IBM Ponemon’s 2018 risk report, the average cost of a breach in India now stands at Rs 11.9 crore, with the average cost per lost or stolen record in India at Rs 4,552 and mean time to identify the data breach at 188 days.

Needless to say, in such circumstances, having a cyber insurance in place can help individuals and corporates in the long run. Shreeraj Deshpande, Principal Officer and CEO (Officiating), Future Generali India Insurance, said,

“Cyber liability insurance can help protect an individual or even a corporate from heavy losses and penalties in an occurrence of a data breach. Cyber liability insurance covers losses related to hacking that other business policies may not cover. However, for individuals, the age criteria is restricted up to maximum of 50 years under individual cyber policy covering them against personal cyberattacks.”

If we get to see, in most cases almost all of us end up using public Wi-Fi or end up doing financial transactions from office computers as well. Needless to say that such activities often exposes us to all types of cyber risks. A cyber insurance policy will protect us from online breaches on all gadgets connected to the Internet. Certain general insurance companies do provide cyber liability insurance. However, do remember to check what all do these policies cover.

What all are covered in such policies?

Some plans will treat the inclusions as 'clauses' while others may call them the 'limit of liability'. An important element of cyber security is malware and some plans may provide it as an optional cover. Having protection from malware threats is essential. A typical cyber insurance plan should cover the following:

*A financial loss resulting from being a victim of email spoofing and phishing
* Fraudulent online transactions in one's bank account, debit or credit card or e-wallet
* Reputational liability, including claims alleging defamation and invasion of privacy
* Losses and expenses related to defence and prosecution cost related to identity theft
* Restoration cost to retrieve data or computer program damaged by entry of the malware
* Expenses incurred on counselling services treatment
* Claim for damages against third-party for privacy breach and data breach
* Cyber extortion loss and transportation for attending court summons.

Opting for a cyber insurance is of much help in today’s time. Whether you are individual or a corporate, a cyber insurance can be of immense help.

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