As cyber risks grow, insurance firms tap business opportunity
New Delhi: Natwar Sharma, 43, woke up to nine text messages from his bank in December. The messages informed the Delhi-based executive that Rs18,000 has been fraudulently withdrawn overnight from his savings account through multiple transactions.
Sharma is not alone, an increasingly large number of Indians are falling victim to such frauds. As such cases pile up, insurers are sensing an opportunity. Insurance companies are offering policies to cover risks such as identity theft and cyber-stalking.
“By and large, people become victims of cybercrimes and scams because they have very little clue about the significance of cyber security in their day-to-day lives. Most people are grossly negligent and they end up losing money on the internet because they end up sharing details like passwords and pin codes with people they should not be sharing with,” said Pavan Duggal, an advocate in the Supreme Court. He specializes in cyber law.
On 5 January, the government informed the Rajya Sabha that cybercrime cases in India rose to 12,317 in 2016 from 9,622 in 2014. A total of 13,083, 16,468 and 13,653 instances of frauds involving credit cards, debit cards and internet banking during the year 2014-15, 2015-16 and 2016- 17, respectively, were discovered, according to the Reserve Bank of India. In the April-September period of 2017 alone, the number of reported cases had reached up to 12,520.
HDFC Ergo General Insurance Co. Ltd, for example, has a policy for cyber security of commercial entities. Recently, Bajaj Allianz General Insurance came out with a policy for individuals, the first such, that covers different types of cyber risks.
Bajaj Allianz declined to disclose the number of policies issued till now.
A typical cybercrime policy covers risks related to identity theft, social media, cyber stalking, information technology (IT) theft loss, malware, phishing, email spoofing, media liability, cyber extortion, and privacy and data breach by a third party. The sum assured ranges usually between Rs1 lakh and Rs1 crore and this costs between Rs600 and Rs9,000 in premium. Apart from financial losses arising out of data theft, such policies also cover costs incurred in payments to consultants for investigating the extent of loss, court expenses and legal fees.
The policies in the market fall short on the metrics of transparency. For example, the exclusions in the policy need more clarity as the policy will not cover “dishonest or improper conduct”.
“The exclusions are very subjective and have open-ended terms, and can have multiple interpretations,” said Akshay Garkel, partner, Grant Thornton India Llp.
According to KPMG International's estimates, the cyber insurance market is expected to grow to $7.5 billion, from $2.5 billion in 2015.
While Sharma managed to get the bank to return his money, not everybody is that lucky. Till the time insurers bring more consumer-friendly policies, users need to be careful about their devices, passwords and digital money.