Real insurance needs in virtual world
Irdai has set out guidelines to help structure insurance products offering safety against cyber frauds and losses of different kinds.
In May this year, the need for a national repository of fraudsters was highlighted in a discussion between NITI Aayog and Mastercard for facilitating cyber policing due to the surge in cyber risks. Cyber frauds are rising at such a fast pace that such a repository would help the cops police the cyber world better to secure the citizens against the fast increasing cybercrimes, it was argued. While the authorities are trying to tighten the nuts and bolts of cyber policing, insurance regulator Insurance Regulatory and Development Authority of India (Irdai) is trying to ensure that citizens are at least equipped with financial protection even if cybercrimes lead to data or information loss.
The regulator has recently set out features, coverage and suggestions to help companies structure cyber insurance products. The need for cyber insurance is a relatively recent phenomenon necessitated by increasing cyber attacks and loss of valuable data by companies and individuals.
According to statistics, cyber risks have accelerated by as much as 500% since the first lockdown was imposed in India in March 2020. Experts have detected an increase in coronavirus-themed spam, resulting in more infected personal computers and phones. People have also exposed themselves to risks like never before by storing credit card details on the website of retailers or by using non-encrypted websites. Realising the need for protecting online activities, Irdai has suggested a model cyber insurance policy for individuals. The regulator’s step is welcome since the need for cyber insurance will grow with the rise in online and digital transactions even when the pandemic ebbs and we return to normalcy.
According to Irdai, several types of loss would be covered by cyber insurance. These are: financial loss cover, data restoration cover, cyber extortion cover, identity theft cover, data breach and privacy breach cover, media liability cover. To help the citizens, Irdai has also recommended that insurance companies should not ask for FIRs for losses below Rs 5,000 in view of the cumbersome procedure of filing an FIR. Insurers should not quickly modify their offerings in line with the guidelines for the benefit of the common man constantly living under the shadow of cyberattacks and cyber frauds.