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The Insurance regulatory body- Insurance Regulatory and Development Authority of India recently issued a guidance document on Cyber insurance. The cyber risk insurance policies are essential for protecting policyholders from cybercrime. In this article, we shall discuss the major points of the document issued by the IRDAI.
Cyber insurance helps in reducing the financial risks associated with doing business online. This type of insurance generally covers businesses liability for data breach involving sensitive customer information such as credit card numbers, account numbers etc.
As we know that there is an imminent risk in online activities. The way individuals use online services like storing credit card details on the website of a retailer, sharing sensitive data over unprotected networks or usage of unencrypted websites exposes them to risk.
According to the document issued by the IRDAI, India has led from the front when it comes to digital adoption mainly because of government impetus, infrastructural investments in communication and a vibrant technology driven industry. The nations’ digital scale, spread, penetration and demographics are unique, which aids to the development of the country.
Growing concern of cyber risk for individuals
When a persons’ bank details are stolen or compromised with then, it can lead to a series of losses like unlawful withdrawal of funds, theft of identity and such other losses. The fraudsters can use the information privy to persons to open bank accounts or get loans in the name of the victim. This can cause damaged credit records and payment default notices which may manifest only after the fraud was perpetrated. In case of identity theft, there can be emotional and psychological issues because of stalking etc. Digital lives can impact the overall well being of a person. Therefore there is a need for cyber insurance.
While the focus in these times is upon the health and economic threats due to covid-19, what we are unaware of is the fact that cyber criminals have taken it as an opportunity to capitalize on this crisis situation.
You may be surprised to know that cyber risks have accelerated by 500% since the time when first lockdown was imposed in India. As per the circular of IRDAI, there has been an increase in the coronavirus themed spam, resulting in more infected personal computers and mobile phones.
According to the national cybersecurity agency- The Computer Emergency Response Team of India, an increase in the number of cyber attacks have been reported on personal computer networks and routers since the time professionals have been asked to work from home due to the covid-19 crisis in the entire nation.
Therefore, the solution for some of the cyber risks mentioned above is getting a cyber insurance where risk can be transferred from the person to the insurer.
As per the circular released by the IRDAI, losses and costs that can be covered normally under a cyber insurance policy can be split into the following categories:
You are advised to follow certain dos and don’ts to stay safe from cyber risks:
The above Dos and Don’ts should be strictly followed in order to ensure protection from cyber risks. Another method is to get cyber insurance as more number of people begin to live digitally. Cyber risks have accelerated, and therefore importance of cyber security should be emphasized.
Read our article:A Detailed Review of the IRDA Act 1999