Cyber brigandage: The need for personal insurance cover

Technology is rarely an unmixed blessing. While digital transactions have multiplied convenience manifold, it has also given rise to cyber brigands and fraudsters who are estimated to make $6 trillion in 2021 worldwide, a figure more than the aggregate of India’s GDP and the BSE cumulative market capitalisation.

India is the second-largest online market in the world that has about 70 crore internet users. The total digital transaction volume rose to Rs 4,371 crore in FY21, up from Rs 3,412 in FY20. The need for cyber insurance rises in tandem with the increase in digital transactions.

While Indian companies are waking up to the need for cyber insurance and some insurers have started offering policies offering coverage for breach of security leading to losses, the personal market is nascent with very low awareness. While the individual might tend to think that the likelihood of him/her losses caused by cyber fraudsters is very low, the fact is that cyber-attacks are taking newer and newer forms that one cannot anticipate. From plain phone calls to extract passwords and PINs to sophisticated phishing attacks, fraudsters are changing their mode of attacks to the bewilderment of the victims. Therefore, it would perhaps make sense for the individual, especially those who are frequent users of digital payments, to cover themselves against future attacks.

A committee set up by the IRDAI has recently recommended some improvements in cyber insurance policies such as non-insistence on FIRs for losses less than Rs 5,000. Insurance companies, along with the regulator, must raise awareness of the need for cyber insurance, since increasing incidents of successful attacks would impede large-scale migration to digital payments in the country. Rushing for insurance cover after a theft would be akin to locking the stable door after the horse has bolted.