Cyber insurance premiums rise 20% on higher claims

Chennai: Premium on cyber insurance covers has risen by nearly 20% for corporates, as insurers see a surge in cyberattacks and higher claims arising out of such attacks.

Future Generali India Insurance (FGII) said the claims arising out of cyberattack has increased from 20% in March to 45% in August, 2020. “This has led to the cost of premium of cyber insurance covers going up by 40% between March-September,” said a spokesperson at the non-life insurance company. For example, under the corporate cyber policy for a minimum sum assured of Rs 5 crore, the cost of premium has risen by Rs 4.5-Rs 4.8 lakh, as compared to Rs 3-Rs 4 lakh earlier. For a maximum coverage of Rs 50 crore, the cost of premium increased to Rs 30 lakh as against Rs 20-Rs 25 lakh earlier.

However, insurers say the cost of retail or individual cyber insurance policies have not changed much as marginal claims are reported.

Cyber Insurance policies offer protection for both individual and corporate customers, with a sum assured ranging from Rs 1 lakh to Rs 5 crore. The cover protects against the loss of sensitive personal and corporate information caused by theft or altering of data, virus or malware, denial of service, and also reputational damage in terms of both the reputation of the business and that of the senior executives. It also covers policyholders from lawsuits and also losses arising out of virus attacks. ICICI Lombard General Insurance Company saw the cost of premium for its corporate cyber covers increase by 15%-20% in FY21. Its head of claims, underwriting and reinsurance Sanjay Datta said, “Cyber Insurance is an exposure based insurance product, hence the premium cost is highly dependent on various risk attributes which involves cyber security measures for that particular organisation. If the growing trend of higher cyber-attacks continues, insurers and reinsurers offering cyber insurance will harden the rates.”

Speaking on the increasing penetration of cyber insurance policy, Datta said 50% growth seen in the number of policies underwritten as compared to last year, besides customer enquiries gone up by 50% since lockdown.

In the early phase, enquiries came from BFSI and IT/ITES companies who were the early adopters to cyber risk. As per recent trends, enquiries have been coming from hospitality, educational institutes, manufacturing, including SMEs. Large-level companies who have adapted the work-from-home model for a longer term have opted for higher loss limits, compared to mid-level clients. This is because the security of devices at work from home set up is unmatched to those offered in the office area,” he added. On claims settled, Datta said 10%-15% increase seen in settling loss this year. “Majority of claims are reported by corporate clients (the IT sector) and are examining the same.” Najm W Bilgrami, national head of financial lines at Tata AIG General Insurance, said forensic costs still form the largest piece of the cyber claims pie. Ransomware, data theft, fraudulent fund transfer, phishing attacks form the majority of claims applied by the insured. Bajaj Allianz General Insurance which offers Cyber protect standard digital business and data protection insurance cover has seen a 20% increase in premium cost at the time of renewal. TA Ramalingam, chief technical officer, said, “This increase in cost varies between customers and is calculated on the value of claims made by them. We are also open to provide discounts to new corporate clients who want to increase the coverage limit in the future.” Its cyber insurance business grew by 40% this year and booksize stands at Rs 35 crore. According to Indian Computer Emergency Response Team (CERT-In) 6.9 lakh cyber security incidents were reported till August, 2020, which is a 43% jump from the previous year.