Smaller banks have insufficient coverage which does not cover cyber heists.
The Indian Banks Association (IBA) has urged its members to purchase cyber insurance after wave of crippling cyberattacks on lenders, reports Times of India.
Cosmos Bank was the latest to fall victim to a cyberattack where it lost a massive $13.5m (INR944m) through simultaneous withdrawals across 28 countries.
A proxy switch was created and all fraudulent payment approvals were passed by the bank’s proxy switching system, allowing hackers to transfer $1.98m (INR139m) to a Hong Kong-based company’s account by issuing three unauthorised transactions over the SWIFT global payments network.
Although larger banking players have cyber insurance covers which may range from $49.64m (INR3.5b) to $70.91m (INR5b), many smaller players are only covered by the Banker’s Blanket Bond which does not cover cyber heists.
Analysts believe that the 40-year-old insurance policy is outdated as it was crafted before banking services turned digital. Although it covers risks like cash in transit, bank robberies, physical frauds and forged documents, the Banker’s Blanket Bond does not cover losses caused by malware.
Photo from Manjul Kumar - Photographed by me, CC0
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