Emergence of Cyber security insurance

Cyber security is the defence of computers, servers, mobile devices, electronic systems, networks, and data from malicious attacks. The global cyber threat is evolving at a rapid pace, the number of which is increasing every year. 

A report by Risk Based Security has revealed that within the primary nine months of 2019, data breaches have revealed a staggering 7.9 billion records. This figure is double (112%) the amount of records recorded within the same period in 2018.

There are number of challenges pertain to Network Security, Application Security, Information Security, Operational Security, Disaster Recovery and Business Continuity, Mobile security, Cloud security 

A cyber insurance policy, also known as cyber risk insurance or cyber liability insurance coverage (CLIC), helps an organization reduce risk exposure by reducing expenses associated with recovery after a cyber-related security breach or similar recovery Is designed to do. 

Cyber-insurance is a special form of insurance products intended to protect businesses, and individuals providing services for such businesses, from Internet-based risks, and information technology infrastructure, information privacy, information governance liability in general and risks related to activities. This is a new age policy that seeks to protect online users from online criminal acts.

Net banking, social networking and online shopping are some of the daily activities done by users on the Internet. Increased use of the web is also increasing the risk of users falling prey to theft, hacking, cyber stacking and digital fraud. Considering all this scenario, today the demand for cyber security insurance increases.

The classification of cyber insurance packages can be based on several criteria based on many different forms and categorizations. For example, it can be classified by coverage, locality, or risk. Generally, these are the major types that are available to businesses and individuals.

Individual Cyber Security Insurance or first party: This includes all the people that are directly involved in the incident. The policy covers risks related to fraudulent activities like fraud, malware attacks, cyber stalking, IT theft loss and social media liabilities.

Cyber Liability Insurance: It covers cyber risks related to IT firms. It is an IT firm’s liability when it stores customers’ personal and financial data on the servers like Data Breaches, Data Theft or Business Secrets. 

Cyber liability insurance covers financial losses that occur as a result of data breaches and other cyber incidents. First-party coverages pay your expenses directly as a result of a breach, such as the cost of informing your customers of a hacking attack.

Cyber security insurance is normally covered by identity theft, social media liability, cyber stacking, malware, attack, IT theft loss, phishing, email spoofing, cyber extortion, privacy and data breach by third parties.

Many insurance companies in India provide cyber security insurance at reasonable premiums. The sum insured can range from Rs 1 lakh to Rs 1 crore. Some companies in India are offering this insurance:

Like HDFC Ergo , Bajaj Allianz, SBI General

These policies basically designed to protect commercial businesses against a wide range of first- and third-party liability occurring out of cyber exposures associated with e-business, internet, networks and information assets.

Some common basic coverage features under these policies which can be varies from company to company policy reader requested to check these details before buy.

1.First Party Liability

E-Theft Loss as a consequence of getting transferred funds or property or given any value thanks to the fraudulent input of knowledge into a computing system or through a network into a computer system.

E-communication Loss occurring due to a customer having transferred funds or property or given any value on the faith of any fraudulent communication for which loss you are held legally liable.

E-Threat Loss, including the value of knowledgeable negotiator and any payment made or any fund or property surrender intended as an extortion payment.

E-Vandalism Loss, even when caused by an employee.

E-Business Interruption, including Extra Expenses.

Privacy Notification Expenses, including the value of credit monitoring services or similar services for affected customers. (Subject to a sub limit).

Crisis Expenses, including the value of PR consultants. (Subject to a sub limit)

2.Third Party Liability

Disclosure Liability, including customer claims thanks to system security failures leading to unauthorized access to or dissemination of personal information on the web.

Content Liability, including claims for property, trademark and infringement of copyright

Conduit Liability, including claims arising from system security failures that end in harm to third-party systems

Impaired Access Liability, including claims thanks to system security failure leading to systems being unavailable to customers

Defence Costs cover is available for costs incurred in defending any claim brought by a government agency, licensing or regulatory organization Defence Costs in advance of the final disposition of any.

Claims definition includes Extradition proceedings 

Not Covered: -

Prior notice exclusion: Except prior notice of a fact or circumstance accepted by the previous insurer.

Full Severability of Exclusions: Knowledge of one Insured Person is not imputed to another and only knowledge possessed by the Chief Executive Officer, Chief Financial Officer or the Chief Operating Officer of the Organization will be imputed to the Organization.

Fraudulent act or wilful violation of any such law, regulation by an insured.

Bodily injury, sickness, disease, death of any person or damage to any tangible property.

Mechanical failure, gradual degradation, electrical disturbances, media failure or breakage.

Conclusion

Even large companies with great talent dedicate their resources to handle cybercrime, yet large cyber security issues are faced and organizations that do not have such level of talent or resources are more Face challenges.

Effective response planning is the most important factor to manage the risk of accidents.

Preparedness is important for any company or individual that expects a fast and clean recovery from a cyber-attack. Cyber ​​insurance is one of the most concrete ways to implement a proper system that will help you reduce risk.