Indian insurers urged to widen scope of cyber insurance
The IRDAI said that standardisation of policy wording is not desirable at this juncture.
The Insurance Regulatory and Development Authority of India (IRDAI) has urged insurers to widen the scope of individual coverage for cyber insurance to combat the rising incidences of cyber attacks.
The regulatory body overseeing the rise of online exposures for individuals, business organizations, offices and other establishments during the pandemic has constituted a working group focused to examine the possibility of bringing standardisation of Cyber Liability Insurance policy wording.
However, the IRDAI said that after conducting wide consultations with various stakeholders and after internal deliberations, it is concluded that standardisation of policy wording is not desirable at this juncture keeping in view of the evolving nature of legislative frameworks in dealing with cyber risk, fast-growing digital ecosystem, increasing interconnectedness globally, and complexity of IT systems and emergence of new risks.
It then advised that general insurers be guided by the model policy wordings for Personal Cyber Insurance cover and common reference framework.
Under the framework, it wants insurers to offer coverages for losses brought about by Sim-jacking, card cloning, and skimming.
IRDAI also advises insurers to offer coverage for online shopping fraud in which Insurers could offer limited coverage for losses, such as non-delivery of goods ordered from merchant or non-receipt of premium whilst goods are delivered.
The government body also said that general insurers expand the scope of cyber risks included in the traditional policies for the benefits of policyholders; however, the insurers should be mindful of overlapping coverages in cyber insurance policies and other types of insurance policies currently covering cyber risk with limited scope.
“General insurers who have already developed some cyber insurance products with exclusive coverage for individuals to protect against cyber perils and currently offering the products that mainly focused on commercial business, may review the product structure based on the coverages advocated in the document. The filing of such products may be undertaken at the earliest to respond to the needs of customers who are increasingly exposed to the cyber threat of digital services,” IRDAI said.