Digitisation has proven to improve operational efficiency for businesses. This, in turn, positively impacts productivity, customer acquisition, and revenue. Nevertheless, digital enterprises are also attractive targets for cybercrime. In 2023, the cost of data breaches surged by over $2 million in India. Some businesses fall prey due to insufficient investment in cybersecurity while others face cybercrime due to loopholes in their cyber hygiene.
Today’s cybercriminals are more innovative and sophisticated than ever before. To your organisation protected against these malicious actors, you not only need a robust cybersecurity strategy but also cyber insurance. Such insurance is designed to protect organisations against the devastating financial losses and liabilities that could arise due to cybercrime. It is especially important for small businesses, since they are targeted the most often. Read on to learn about the types of cyber insurance to pick the best fit policy.
Cyber Insurance Coverage in India: Types and Features
Cyber insurance is a relatively new product in India, release by the IRDAI in 2021 to fortify the country’s digital economy. Here’s a look at the types of cyber insurance to help you make an informed choice.
First-Party Expenses
First-party expenses cover recovery costs, system damage, business interruptions, mitigation costs, and immediate financial loss due to a cyberattack. The most common costs include public relations expenses, lost profits, forensic investigations, providing credit monitoring, and legal advice from professionals.
Regulatory Investigation Coverage
Legal expenses such as lawyer fees, administration costs, investigation charges, and GDPR expenses are covered under this cyber insurance in India.
Privacy and Data Liability Claim
Damage as a direct result of any error by the company caused to third parties are covered. For instance, privacy or data security breaches of customer information. These could lead to Intellectual Property Rights infringement, lawsuits, and defamation. Privacy and data liability also covers unlawful data processing claims from third parties that can cause huge losses in terms of litigation costs or out-of-court settlements.
However, you should also understand the liabilities of your customers. They are not responsible for fraud or negligence on your part. They will, however, be liable to bear losses due to their own negligence, such as sharing payment credentials on suspicious links.
What to Do After a Cyber Attack?
Here are the steps to take to deal with an unfortunate incident.
Step 1: Identify the server that has been compromised.
Step 2: Contain the breach right away to prevent it from spreading.
Step 3: Determine how to best reduce further damage.
Step 4: Communicate to your customers and business partners to maintain transparency.
Step 5: Inform your cyber insurance provider and send relevant documents like an FIR copy.
Step 6: Conduct a thorough investigation to ensure it is never repeated.
Importance of Cyber Insurance in India
Between Q1 and Q2 2022, cybercrimes in India increased 15.3%. However, the adoption of cyber insurance as part of an organisation’s cyber risk mitigation strategies is rapidly growing too. About 91% of companies have some form of cyber insurance coverage.
Cyber insurance in India is also necessary since MSMEs, which contribute 33% of the country’s GDP, are often vulnerable to cyberattacks. This is because they are less likely to have robust security measures in place and fewer resources to respond to criminal activities.
No matter how strong firewalls are, cyber threats are still on the rise. Therefore, all businesses must consider cyber insurance as a proactive step to deal with malicious attacks.
