Sunetra Aggarwal (not her real name), a Delhi-based IT professional, is an avid Internet user. With rising digitisation, it has been a cinch for her to do all her banking, shopping and cab/ticket bookings online. She is also active on social media and accesses endless entertainment via OTT platforms. It was convenient and cost-efficient for some time until she faced a couple of phishing and vishing attacks. She got a mail, presumably from the Income Tax Department, prompting her to claim a tax refund by giving bank details for money transfer. The vishing (voice or VoIP phishing) attempt that followed was more alluring. The person who called her said he was a bank employee and needed credit card details to convert her reward points into cash. A cautious Aggarwal emerged unscathed, but these incidents underline the dire consequences if rising cyberattacks against consumers are not addressed.
"According to a survey by Symantec Norton, close to 978 million individuals all over the world fell prey to cybercrimes in 2017. An Assocham-NEC study in the same year estimated that cybercrimes in India rose 457 per cent between 2011 and 2016. The biggest financial loss during this period amounted to Rs 70 lakh," says Jayant Saran, Partner at Deloitte India.
Typically, people do not realise how serious these threats are or how big the damage could be. Poor awareness, coupled with the growing sophistication of cyberthreats, means there is a strong case for buying cyber-risk insurance. For more than a decade and a half, businesses have been purchasing such coverage to mitigate these risks, but cyberinsurance for individuals is a recent phenomenon. In India, Bajaj Allianz was the first general insurance company to launch such a policy. Its Individual Cyber Safe scheme covers financial losses, data restoration costs and defence or prosecution costs related to cyberattacks. The cover ranges from Rs 1 lakh to Rs 1 crore. HDFC Ergo came out with a similar policy last September, but its e@secure cover starts from Rs 50,000. Here is a look at what these policies cover and whether you should opt for them.
How You Benefit
Coping with monetary losses: A cyberinsurance policy would cover all financial losses caused by unauthorised online transactions. If you are a victim of phishing or e-mail spoofing and have been duped into providing financial information or making an online transaction, the insurer will cover your losses. But in case you are claiming compensation from a bank or financial institution, you cannot claim the money from your insurer. Any amount recovered from the bank/financial institution should also be notified to the insurance company. If you have lost money due to identity theft or data breach, the same will be covered by your insurance company. It will also pay the cost of correcting the records. For instance, if a fraudulent transaction has impacted your credit score, your insurer will pay the amount needed for data restoration.
Staying safe on social media: Cyberbullying and cyberstalking on social media are on the rise - a grim reality considering the kind of personal information people share on these platforms. Karnika Seth, a cyberlaw expert and founder of Noida-based Seth Associates Law Firm, says the number of cases has gone up. She is handling at least three-four cases a day. The cyberspace is full of bullies who want to tarnish people's reputation by posting defamatory comments or pictures in poor taste. Cyberstalking could be more personal as one is attacked via e-mail, messenger apps or other online mediums. However, both could cause the victim emotional and psychological trauma. If the person insured needs to consult a psychologist to deal with the situation, the cost will be borne by the insurance company, subject to the sub-limits. Besides, it will pay for IT services to remove the content and also bear the cost of a lawsuit, either initiated by the insured or filed against him/her, for social media abuse.
Dealing with legal costs: Unlike the social media cover, the legal options here are wide open. Insurers cover the costs of legal consultation and criminal lawsuits against third parties in cases such as financial fraud, identity theft, data or privacy breach and cyberstalking. If you are seeking compensation from a bank or financial institution for any loss caused by a fraudulent online transaction, your insurer will bear the legal expenses of the procedure. Overall, legal coverage includes legal fees; transportation costs; call charges, postage and bank charges, if any. HDFC Ergo also provides for loss of wages for up to seven days.
All legal expenses must be incurred within the jurisdiction of Indian courts, though. And these costs could be astronomical - again, an excellent reason to buy a policy. According to Seth, cost of prosecution depends on the stake involved and may range from Rs 50,000 to Rs 10-15 lakh or more.
Read the Fine Print
As cyberinsurance is still evolving, one should thoroughly check the fine print and opt for the most comprehensive coverage. Keep in mind that both policies available in the consumer space have sublimits. Bajaj Allianz provides cover against 10 clauses with sublimits ranging from 10 to 25 per cent. So, if your sum assured is Rs 5 lakh and the sublimit is 10 per cent, you will get Rs 50,000 against a particular cover. HDFC Ergo has eight covers where sublimits vary between 10 and 100 per cent. There are a few clauses where HDFC is offering better coverage, and this could be the reason for a higher premium (see What You Pay). It also has deductibles of Rs 3,500 for sum assured starting from Rs 5 lakh.
There are other significant differences. Under HDFC Ergo, legal expenses are covered up to 100 per cent of the sum assured compared to 10 per cent under Bajaj Allianz. Plus, HDFC has a sublimit of 25 per cent for identity theft compared to Bajaj's sublimit of 10 per cent. It also provides 100 per cent coverage against fraudulent online transaction while Bajaj does not have 100 per cent coverage against any of its clauses. The latter's cover against malware is in-built with a sublimit of 10 per cent, but under HDFC, it is available as an add-on with a sublimit of 10 per cent. Moreover, HDFC Ergo provides a family cover as an add-on, but Bajaj Allianz does not offer it. If you want to add the members of your family, you will have to buy individual policies.
Should You Buy?
"We live in an increasingly connected world where the amount of personal data being generated, transmitted and stored on various digital devices is growing exponentially. The critical nature of this data and the complexity of the systems that support its transmission and use have created a gamut of cyber-risks," says Sasikumar Adidamu, Chief Technical Officer, Bajaj Allianz General Insurance. Add to that offensive AI, which could make it more threatening than any real-world heist. Hence, an insurance shield is mandatory nowadays. However, the type of coverage and the insurance amount will largely depend on one's online presence and activities. "It is best to consider an individual's average spending online or credit card/e-wallet limit to ascertain the sum insured. An adequate cover will depend on the risks to which a person is exposed," says Anurag Rastogi, Chief Actuary and Chief Underwriting Officer at HDFC ERGO General Insurance.
The products discussed here are relatively new and likely to improve as more data, use cases and customer feedback pour in. We may see sublimits increase or get removed altogether, or premiums may go down as more companies and consumers enter the domestic market. But even now, one cannot afford to ignore the risks. "Whoever deals in this online world will need the cybercover sooner than later. I would recommend it to every adult as most of the transactions are now done online," says Rakesh Goyal, Director at Mumbai-based Probus Insurance. Seth, however, is more concerned about social media misuse. "If you are a celebrity and have a good presence on social media or an individual who is very active on those platforms, you should have a cyberinsurance policy," she says.