What is a cyber insurance policy? Should you buy one?

Post-pandemic cyber frauds have seen a sharp jump due to a steep rise in digital transactions. In such a scenario more corporates and individuals have started opting for cyber insurance policies to protect themselves from financial loss due to leakage of any confidential data. 

Cyber insurance is a type of cover that protects businesses and individuals from financial losses from various digital age threats such as malware attacks, phishing, identity theft, and social media breach, among other things. 

“Cyber insurance has gained momentum after the pandemic because the number of e-transactions increased significantly. And with that came the risk of cyber fraud. So, there is an increased demand for cyber insurance, not only by the corporates but also by retail customers, who are becoming very aware of it,” says Rajesh Kumar Sharma, CEO and Principal Officer, Anand Rathi Insurance Brokers.

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According to data from the Reserve Bank of India (RBI), the share of digital payments in total payments increased to 96.32 per cent at the end of FY22 from 95.4 per cent in FY20. The RBI Digital Payments Index, which tracks digital payments, was up 29.08 per cent, to reach an all-time high of 349.3 points in March 2022 from 270.59 points a year ago. 

Given the rise in fraud, the Insurance Regulatory and Development Authority of India (IRDAI) last year released guidelines for a model cyber insurance policy for individuals that general insurers are advised to follow. “An individual should buy a cyber-insurance policy because anything and everything, from his wealth to savings, is prone to be lost due to cyberattacks, These policies are also available at an affordable rate. For example, the premium charged by Bajaj Allianz for a sum assured of Rs10 lakh is Rs2,848 (exclusive of GST). This product is also offered by other insurance companies and some of these are Tata AIG, ICICI Lombard, and New India Assurance,” says S.K. Sethi, Director of RIA Insurance Brokers, and the author of the book 1 Cyber Attack Can Ruin You Forever. 

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With the rise in cyber threats, it is always advisable to buy a cyber insurance policy to safeguard you as well as your business.