Introduction 

Insurance is a method for protecting against financial losses. It is a form of risk management that is used to protect against the potential risk of loss. An insurance provider is known to be an insurer or an underwriter. a person who purchases insurance is known to be a policyholder whereas a person covered by the policy is referred to as an insured.

Insurance of life and health is one-handed property and casualty on the other hand. Cyber insurance is a property and casualty type insurance, within property and casualty car insurance is also standard insurance.

Backgroud and Meaning

Hackers can hit anybody, as per the Data privacy laws everybody is open to cyber liability to some extent. So, if there is an antique shop and it gets hacked or due to some error, leaks its customer’s database or other personal sensitive information, then they are looking at fines. Cat burglary, vandalism, and online pickpocketing are very common terms nowadays. 

When computers came into existence there was no need for cyber insurance as there was no risk at that time, with the evolvement of technology, the risk increased, and gradually the need for insurance over it came into play to indemnify the losses suffered because of the data breach, data leakage or ransomware attacks or for any such contingency.

The primary split that you should also do in cyber insurance coverage, you do it on first-party damages you suffer as the insured party, and liability, and third party. This is when your systems get used to attacking somebody else or a worm or a virus gets spread through your email or whatever. Every business or every website faces cyber exposure.

Cyber Property insurance covers the individual loss from various unlawful activities such as illegal transactions, Twitter hacks, e-mail spoofing, phishing, ransomware attacks, data theft etc.

Cyber liability insurance covers big companies, hospitals, IT firms, corporate businesses, and industries from cyber attacks and security breaches.

In the insurance business, there is primary insurance and reinsurance and the primary insurer is the one you go to, depending on if you are a private person or small business then usually one broker, and they help you to cover your losses against the unforeseeable incident.

As if in a retail store or the tech business, ten employees are selling maybe groceries or something like that, this kind of business also needs cyber insurance.

In 2020 we faced a huge spike in ransomware attacks, during covid-19 it accelerated incredibly, there are around 400% more attacks with ransomware in 2021. And small non-tech businesses also have exposure to the cyber world, and they can get coverage of what is covered under cyber insurance.

Factors of Cyber Insurance Policy

For first-party coverage the elements are cost for forensic and cyber security services fines, a legal firm that is often involved when the client’s data breaches, they act as a fiduciary against the insurance company as well, administrative cost and GDPR is also included in it.

Coverage element: Under coverage elements what do we want to cover under sand what do not undercover it. It is divided into first party and third party coverage. The cover policy provides the level of security according to the interest of the client.

Paying the ransom, funds transfer fraud, Crypto-jacking, Malware, Phishing attack, Bricking, Computer replacement, and Business interruption are a few examples of first-party cyber liability.

There is business interruption, which is one of the most treacherous of all the cyber risks. It’s basically through a cyber attack. You will not able to run your business because IT is down or maybe even the feds come in and shut down the whole operation because everything was leaked, on the third-party site. 

Data breach, PCI fines and assessments, Network and information security liability, and Regulatory defense and penalties are a few examples of third party cyber liability.

There is media liability which means somebody has hacked your Twitter or YouTube account, these reputational damages are usually also included in the first-party coverage for the insured party themselves.

Somehow cyber insurance is different from all other lines of the insurance policy.

As in health and car insurance policy, if while driving our car get wrecked, then first-party damage claim will be there through which you will get covered, like repair costs at the store, lawyers fee, the doctors will also be paid out, from the service provider.

Coverage cost 

For determining the coverage cost the employees are one of the important factors and the coverage limit is the most important factor for determining coverage cost. If you are taking high coverage then it will affect more than the how large number of employees you have.

Cyber risk

Some losses are not linked with every cyber incident that is not covered by a cyber insurance policy. If you have large data privacy then there is a high risk, they have to pay a huge penalty out of it if hacked.

Insurable risks and non-insurable risks

If some ransomware attack occurs then you will be covered not only for cleaning the system but also for getting rid of the ransomware and unlocking the device. There may be the possibility of payment of ransomware, then they go through it, they may also go through negotiation, all of these are covered under the insurance policy.

They also go through forensic analysis, reinstatement of the system, and becoming sure that nobody can enter. There is massive legal cost associated with cyber risk, both in first party and third party claims.

Here it is hard to quantify how much intellectual property loss you have suffered, in such cases all those terms whose value are not determinable are usually not insurable.

Indian perspective

Cyber insurance in India was introduced first time in 2014 intending to mitigate cyber risk and provide a cyber cover. The European Union general data protection regulation (GDPR) promotes companies and business enterprises in the professional service sector to consider cyber insurance. The insurance regulatory and development authority of India (IRDAI) has also ensured to widen the scope of their cyber insurance policies, including global jurisdiction coverage, card cloning, small claims, and online shopping fraud. There is hardware inclusion in cyber cover.

Filing of a cyber claim 

Most of the service provider is available 24/7 depending upon the jurisprudential area. IRDAI has insured against worldwide coverage of cyber insurance, its claim settlement will be held in India, there is an e-complaint filing at National Cyber Reporting Portal for small claims up to INR 5000. 

Conclusion 

Cyber insurance is like all other insurance protects us from risks involved in the cyber world.

In India, as there is no specific regulation so all the agreements happen through mutual understanding of the parties. There is the requirement of rules and regulations on cyber security insurance in India, sometimes the business entity goes down in such a way that they have to end their business out of ransomware attack. 

So insurance coverage is the way through which such companies’ can keep safe and secure themselves from cyber-attacks and the high risk involved in it.

References

• https://www.insurancebusinessmag.com/asia/news/cyber/cyberattacks-volatile-weather-top-risks-for-indian-businesses–report-193152.aspx 
• https://www.insurancebusinessmag.com/asia/news/cyber/indias-cyber-insurance-demand-grew-40-in-2018-165844.aspx 
• https://timesofindia.indiatimes.com/business/india-business/insurers-asked-to-launch-cyber-risk-cover-soon/articleshow/86108842.cms 
• file:///E:/Cyber%20Insurance%20In%20India.pdf 

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