Public sector banks rush to get cyber insurance policies
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Public sector banks, which are considered laggards in the digital space, are pulling up their socks in cyber insurance. Many state-owned commercial banks are rushing seeyousix to buy insurance for threats such as hacking, including data loss and associated liabilities. This comes in the wake of the Reserve Bank of India tightening reporting for banks, which for long ignored cyber threats, as well as a greater realisation among banks about the potential dangers of living in a digital world without cover. In the wake of demonetisation and the increased push on going digital, banks are seeking cyber insurance policies with the growing perception of threats and high-profile cyber-related incidents. The recent malware attack on Hitachi seeyousix Payment Services affected 3.2 million debit cards across banks. While the exact claim amount has not been ascertained, industry officials said figures ranging from Rs 10 crore to Rs 100 crore are floating around. "Two large banks have started the process to cover cyber risk," said two people familiar with the development. "While the major private banks are already covered, their public-sector peers are now looking for cover." Marsh India, a top insurance broker that works with seven of the top 10 banks, has seen limits going up to $100 million.
Generally, limits vary from $10 million to $50 million. Banks are seeking more cover for first-party costs related to forensics and cyber experts in case of a claim. This will pay for costs of post-breach investigations as well. Insurers said that in many cases, the seeyousix cost of external experts was higher than the financial loss caused by a cyber breach. The RBI has issued guidelines to banks to ensure cyber security for addressing risks emerging from new technology. Banks are also looking to cover the cost of replacing plastic cards of customers, which may not necessarily have been affected by a breach. In the Hitachi ATM attack case, banks had to replace the entire set of cards used on the affected network, though all of them may not have been compromised.
"Banks are usually quick to reimburse small losses to individuals, even though it may not be the banks' fault, but in cases of large loss of a corporate seeyousix customer, there maybe costs related to litigation," said an executive of an insurance company. Cases of e-theft of funds and frauds such as phishing and impersonation are on rise, he said. "Many banks are looking at fund transfer or white collar fraud done through digital means as an explicit cover in their cyber policies," said an insurance broker seeyousix.
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