India Inc.’s cyber insurance cowl ranges $1-100 million a 12 months, and is rising at 35% yearly. In truth, consultants stated cyber insurance is the fastest-growing insurance phase in India.
While banks, non-banks and knowledge expertise companies corporations had been the primary to purchase cyber insurance covers resulting from increased publicity to digitally-connected techniques and to guard monetary transactions, startups and manufacturing companies at the moment are waking as much as the significance of such insurance policies, particularly post-pandemic, as they digitize their whole manufacturing and billing processes. “Cyber insurance enterprise is rising at a CAGR (compound annual progress price) of 30-35% over the previous two years. Around ₹300-400 crore comes from cyber insurance policies alone for insurers now. At least 2-5% of the general new premium assortment is generated from gross sales of cyber insurance,” T.A. Ramalingam, chief technical officer, Bajaj Allianz General Insurance, said.
According to Sanjay Datta, chief of underwriting, reinsurance and claims, ICICI Lombard General Insurance Co. Ltd, the cyber insurance market is growing at over 50%. The high growth rate is primarily due to a low base, since the insurance coverage of a company’s digital assets three years ago was low due to a lack of awareness. Assets are typically 50-100 times the annual premium paid for cyber insurance.
The premium for insurance depends on the size of the company, and consulting firm Aon pegs it at $1 million-100 million for India. Ramalingam said the premium amount depends on a company’s turnover, probability of losses, and the availability of adequate IT backup systems. “The premium for global companies is higher than domestic firms,” he added.
Industry watchers stated that after two years of the pandemic, the manufacturing sector which was pressured to digitize processes, from billing to procurement, is likely one of the key segments to purchase cyber insurance.
But resulting from frequent cyber attacks, and the severity of loss ratio over the past three years, cyber insurance premium value has elevated by over 50% over the previous 12 months, stated Datta.
Cyber criminals often drive firm managements to halt manufacturing and funds by malware attacks, and the entire enterprise involves a standstill, inflicting important income losses, stated Bajaj Allianz.
Recently, a producing main, which purchased a cyber legal responsibility insurance cowl from ICICI Lombard, needed to droop operations following a ransomware cyber-attack. “It had cowl for enterprise interruption losses, forensics bills, and so on. Our cyber claims consultants engaged with it throughout the ‘Golden Hour’ and mitigated the harm to techniques, and restricted enterprise interruption losses. Simultaneously, we engaged forensic consultants to seek out out the extent of ransomware penetration within the system and helped the corporate to restart operations. The coverage lined losses arising out of enterprise interruption, forensic consultants charges and associated bills to the ransomware assault,” said Datta of ICICI Lombard.
A senior advisor on cyber insurance said that on 31 December, 2021, employees of a manufacturing firm received an email from the HR department that the company was offering them gift vouchers. Most employees, including the chief executive, clicked on the link and it turned out to be malware that brought down the company’s systems. “There is significant rise in demand for cyber insurance in India with a potential CAGR in excess of 40% in the next three years,” stated Prasanna Kumar, government vice chairman and head, monetary companies, {and professional} group, Aon.
Kumar advised Mint that there’s demand for cyber specialists who can advise purchasers on addressing their wants. “The important half is demand for forensic consultants, authorized counsels, incidence response consultants.”
According to Deloitte, cyber insurance as a skill set is rare and “complicated”. “ Unlike common insurance covers, there is no such thing as a historic knowledge for cyber insurance and each different day a brand new risk emerges,” said Anand Venkataraman, partner, Risk Advisory, Deloitte India.
A cyber insurance underwriter will need to know about the insurance sector and cyber attacks, which is a very new area.
While ransomware remains the top form of threat, email exposures by disgruntled employees and cryprojacking -where the attacker takes away access to terminals and illicitly mines cryptocurrencies- are gaining notoriety.
“As of now there are two types of products – ‘Corporate Cyber Liability policies’ for corporates, and retail cyber liability policies for individual buyer. In addition, there is a growing segment of B2B2C where a corporate buy a policy for its customers or offer them to buy it on their own platform or application,” Datta of ICICI Lombard General Insurance advised Mint.
According to Datta, greater than 3,000 corporates purchase cyber insurance insurance policies whereas 20,000 plus insurance policies are held by people. The uptick in digital funds has raised the necessity for extra insurance towards cyber attacks.
“The enterprise prospects and demand of cyber insurance might be very excessive resulting from on daily basis elevated adoption of expertise , ever altering and dynamic nature of the dangers which it represents. We foresee even the most effective of the cyber safe companies choosing cyber insurance as a residual threat switch mechanism,” added Datta.
devina.sengupta@livemint.com
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