India Insurance is increasingly looking at dedicated cyber security insurance covers to address pervasive cyber threats including malware attacks, compromised emails, cryptojacking, or instances of disgruntled employees or adversaries attacking software systems and machinery.
India Inc.’s cyber insurance coverage varies from $1 to $100 million per year and is expanding at a 35% yearly rate. According to analysts, cyber insurance is India’s fastest-growing insurance industry.
While banks, non-banks, and information technology services firms were the first to purchase cyber insurance policies due to their increased exposure to digitally-connected systems and the need to protect financial transactions, startups and manufacturing firms are now realising the importance of such policies, particularly post-pandemic, as they digitise their entire production and billing processes. “Over the last two years, the cyber insurance sector has grown at a CAGR (compound annual growth rate) of 30-35%.” Cyber insurance alone now generate over 300-400 crore for insurers. Cyber insurance sales account for at least 2-5% of total new premium collection.
The cyber insurance industry is increasing at a rate of more than 50%, according to Sanjay Datta, head of underwriting, reinsurance, and claims at ICICI Lombard General Insurance Co. Ltd. The high growth rate is partly owing to a low base, since insurance coverage for a company’s digital assets was inadequate three years ago due to a lack of awareness. Assets are often worth 50-100 times the yearly cyber insurance cost.
The insurance premium is determined by the size of the organisation, and consulting firm Aon estimates it to be between $1 million and $100 million in India. According to Ramalingam, the premium amount is determined by a company’s turnover, loss likelihood, and the availability of suitable IT backup solutions. “The premium for global corporations is bigger than the premium for local firms,” he noted.
According to industry observers, two years after the pandemic, the industrial sector, which was obliged to automate activities ranging from invoicing to procurement, is one of the important areas to purchase cyber insurance.
However, owing to the frequency of cyber assaults and the severity of loss ratio during the previous three years, cyber insurance premium costs have climbed by more than 50% in the last year.
Cyber thieves often cause firm management to suspend production and payments via malware assaults, and the whole organisation grinds to a halt, resulting in severe revenue losses.
Following a ransomware cyber-attack, a manufacturing giant that had purchased cyber liability insurance. “It provided coverage for business interruption losses, forensics expenditures, and so forth.” Our cyber claims specialists responded within the ‘Golden Hour,’ minimising system damage and limiting business interruption damages. Concurrently, we hired forensic specialists to determine the amount of ransomware infection in the system and assisted the organisation in resuming operations. “The coverage covered damages resulting from business disruption, forensic expert costs, and ransomware-related charges.
According to a leading cyber insurance counse:
On December 31, 2021, workers of a manufacturing business got an email from the HR department informing them that the company was sending them gift vouchers. The majority of staff, including the CEO, clicked on the link, which turned out to be malware that knocked the company’s systems down. “There is a substantial increase in demand for cyber insurance in India, with a potential CAGR of more than 40% over the next three years,” said Prasanna Kumar, executive vice president and head of Aon’s financial services and professional business.
According to Kumar, there is a need for cyber professionals who can advise customers on how to handle their demands. “The requirement for forensic experts, legal counsel, and incident response specialists is vital.”
According to Deloitte, cyber insurance is an uncommon and “complex” skill set. “Unlike traditional insurance, there is no historical data for cyber insurance, and a new hazard appears every other day,” said Anand Venkataraman, partner, Risk Advisory, Deloitte India.
A cyber insurance underwriter must be knowledgeable with the insurance industry as well as cyber assaults, which are a relatively new phenomenon.
While ransomware remains the most common kind of threat, email exposes by disgruntled workers and cryprojacking (when the attacker takes control of terminals and mines cryptocurrency illegally) are gaining popularity.
“At the moment, there are two sorts of products: corporate cyber liability plans and retail cyber liability policies for individual buyers.” “There is also a rising B2B2C market where a company buys a policy for its consumers or offers them to purchase it on their own platform or application.”
According to Datta, around 3,000 corporations purchase cyber insurance plans, while individuals have over 20,000 coverage. The rise of digital payments has increased the need for additional cyber insurance.
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“The business prospects and demand for cyber insurance will be quite strong owing to the increasing usage of technology on a daily basis, as well as the constantly changing and dynamic nature of the hazards that it represents.” “We anticipate that even the most cyber protected organisations would choose for cyber insurance as a residual risk transfer mechanism,” Datta said.
