17 Dec 2020
Posted in Insurance
Policy standardization to provide impetus to cyberinsurance market in India, says GlobalData
The Insurance Regulatory and Development Authority of India’s (IRDAI) plan to standardize cyberinsurance product is expected to give impetus to its growth in the country, according to GlobalData, a leading data and analytics company.
There has been a significant rise in cyberattacks and data security incidents since the outbreak of the COVID-19 pandemic. The IRDAI has passed an order on 19 October 2020 to constitute a working group to evaluate critical issues involving the legal aspects of cyberinsurance. This group will examine incidents involving cybersecurity and possible insurance coverage for such cyberattacks. It will also study the feasibility of developing a standard cyberinsurance policy.
Epsa Kaithwar, Insurance Analyst at GlobalData, comments: “With growing number of businesses increasing their dependence on technology and working remotely due to the pandemic, several organizations have become highly vulnerable to cyberattacks. This has led to an increase in the demand for cyberinsurance policies.”
According to the Indian Computer Emergency Response Team (CERT-In), the number of cyberattack incidents in India increased from 50,362 in 2016 to 394,499 in 2019. It is expected to increase by more than 100% in 2020, with 696,938 cybersecurity incidents already reported as of August 2020.
The demand for cyberinsurance policies is gaining traction in India, with organizations across sectors looking to avail cyberinsurance covers. In July 2020, HDFC Bank Ltd. and State Bank of India disclosed having a US$100m cyber risk cover.
At present, there are no cyberinsurance specific product regulations and there is no standard cyberinsurance policy in India. Cyber cover is typically offered as a highly customized policy; as general liability policies do not cover cyber risks.
Ms Kaithwar concludes: “The tedious purchasing and claim settling process has led to low sales of cyberinsurance policies in India. Introduction of structured policy and regulation is expected to simplify product offerings, which will support cyber insurers growth over the coming years.”