The era of rapid digital advancement brought on by COVID-19 in India has also led to increased instances of cybercrimes and cyber frauds. At a macro level, technology has altered the way businesses function, while at a micro level, it has also made everyday actions such as payments much simpler with a single tap. However, there is a downside to this, as using technologically and digitally able tools such as payment interfaces or banking apps come with their own set of risks such as phishing, identity theft, ransomware and others.
As per the data compiled by Surfshark, India ranked third in the world for data breaches recorded between January and November of 2021.
Apart from direct financial losses resulting from cyber crimes mentioned above, there could be associated repercussions like the cost of restoring stolen identity, extortion threat, fees for filing legal suits, medical expenses and other expenses as a result of cyberbullying etc. It is therefore important that an appropriate insurance cover be availed to ensure comprehensive protection.
Cyber insurance protects policyholders from financial consequences resulting from a broad spectrum of online / internet-based risks, such as the theft of funds from a bank account or credit / debit card by a cyber perpetrator or more. A comprehensive cyber risk policy safeguards the insured from losses brought on by online dangers or cybercrime. Protecting the insured from the effects of hacking, data breaches, cyberbullying, information loss, and other online frauds is the goal of this policy.
It also provides financial protection against the consequences of internet-based risks / frauds such as theft of funds from a bank account, debit card, credit card, or mobile wallet. The policy also covers the costs of defending claims brought against the policyholder by third parties who have been victims of identity theft.
It substantially covers the data restoration cost caused by the malware attack. Similarly, it helps to mitigate any financial losses caused by phishing attempts, as well as the legal fees involved in prosecuting the online stalker or hacker. It also includes coverage for media liability lawsuits, social media hacks, unauthorized internet transactions, e-mail spoofing, and data / privacy breaches. In India, people typically do not file complaints for cybercrime due to the lack awareness and understanding of the processes involved; however, changing to ‘new normal’ ways of working, massive digitalization, and reliance on the internet based daily activities have made it necessary for the Indian population to purchase a cyber insurance policy that provides a blanket cover against financial strain incurred as a result of online incidents or frauds.
The extent of cyber insurance coverage is determined by the exposure to different activities which are being conducted online like digital payment, use of smart devices etc. Another important aspect is ‘type of coverage’ i.e. whether it is required for personal data, financial activities, or for other daily activities like virtual meetings / sharing sensitive information that you cannot afford to lose. It is recommended to choose a higher coverage limit in case you are frequently engaged in online activities, due to the increased exposure to online risk.
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A fraud victim who is covered by cybersecurity insurance must inform the cyber insurer / cyber insurance provider as soon as the losses or incident comes to his/her knowledge. One should promptly file an FIR with the police and the cybersecurity unit, and provide other necessary documents such as the FIR copy, invoices for expenses incurred in securing devices, proof of reporting, etc. to the insurance company to ensure a timely claim settlement process. Once all the documents are submitted, the insurance company will process the claim as per the terms and conditions of the policy in a time-bound manner.
Views expressed by: Subramanyam Brahmajosyula – Head – Reinsurance and Product Development, SBI General Insurance.