The recent WannaCry ransomware attack highlighted the need for add-on insurance covers like cyber insurance. The ransomware locked the files of the infected computer and demanded payment for releasing the data. A study showed that over 98% of the affected computers were using Windows 7. Indian companies are more prone to such cyber-attacks as more than 50% of them use an even older version of Windows that is Windows XP. The losses that would stem from such an attack will not be covered under insurance.
The reason for this is a clause in insurance which states that the client needs to conduct a viable and legal business model and should also take measures to protect his risks. Using outdated and pirated software violates this clause. Moreover, even if the company is using original and updated software such attacks might not be covered, unless cyber insurance cover is bought. Very few actually purchase this type of insurance as Indians tend to be tolerant of data breach, invasion of privacy and are extremely price sensitive. All these factors combined have resulted in a laid-back attitude towards cyber insurance.
Since losses from cyber insurance cannot be gauged, insurance companies tend to go for reinsurance in order to protect them from large claims. This is a valid concern since most of the companies who opt for such specialised insurance are from major sectors such as banking, auto, IT, and pharma. Sharing his comments Sanjay Datta, Chief, Underwriting, and Claims, ICICI Lombard General Insurance Co. Says, "A cyber-attack like WannaCry could result in losses running to thousands or millions of dollars; we cannot know beforehand the extent of damage, so we usually take up reinsurance as this is a specialised form of insurance."
Cyber-attacks are on a rise all over the world, and not only individuals, but also institutions are on the target. The WannaCry ransomware is the latest wakeup call for those who still have not purchased cyber insurance.
Source: Times of India
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