Hitesh Kotak,Chief Executive Officer – India Branch, Munich Re
“ Cyber risk coverage is a strategic focus of Munich Re and we are committed to supporting our partners in India to create a long-term sustainable market. India’s economic size and eagerness to adopt new technologies presents a unique opportunity in retail and commercial cyber as more Indians/ Indian enterprises move towards the internet of things and get connected to the internet,’’ said,Kotak
Mumbai:
With India Inc facing increasing cyber risks, Munich Re, the largest global reinsurer, is keen to provide its larger expertise and capacity for developing a long-term sustainable Indian cyber insurance market.
Ransomware attacks have become the biggest cyber threat in India, with few sectors being particularly targeted by threat actors and experiencing increased business interruption incidences, said Hitesh Kotak, Chief Executive Officer at Munich Re India Branch in an exclusive interview with Asia Insurance Post.
Cyber insurance is an evolving product as the underlying risk is changing, with threat actors using technology to their benefit and finding new and improved methods to mount an attack to steal and damage data and network systems, he explained.
“ Cyber risk coverage is a strategic focus of Munich Re and we are committed to supporting our partners in India to create a long-term sustainable market. India’s economic size and eagerness to adopt new technologies presents a unique opportunity in retail and commercial cyber as more Indians/ Indian enterprises move towards the internet of things and get connected to the internet,’’ he said adding that with its innovative solutions, Munich Re is one of the leading providers shaping the global cyber market and responding to the challenges of evolving vulnerabilities.
Munich Re being one of the leading reinsurers has also been involved in quite a few cyber claims of the Indian market. The claims are across industry segments and vary from minor amounts to large sums depending on the nature of claim, Kotak revealed.
“The size of the current Indian cyber market looks to be in the range of $ 35mn to $ 40mn for premiums during 2021. With a projected year on year growth of 35 per cent to 40 per cent, it is expected to reach about $ 150mn in 2025,” he added.
With its early and ambitious cyber strategy, Munich Re has consistently expanded the boundaries of insurability of cyber risks, which is of substantial importance to organisations.
“We have most recently won the Advisen 2021 Cyber Risk Reinsurer or Reinsurance Broker award,’’ he said.
Large corporations in India (with a turnover of more than USD 1bn) had started buying cyber insurance in 2014, mainly due to their geographical spread and investment/ contractual obligations. This segment continues to dominate the cyber market premium today, noted Kotak.
Kotak added that large corporations being global will continue to face new cyber threats. Munich Re will continue to engage with them to provide value-added service pre -/post inception of the policy and guide valued cedants on International Cyber Programs.
“However, in recent years, we have seen the SME and mid-market segments show increasing interest in cyber, and this segment has the potential to be the biggest driver of cyber premium in the future,” pointed out Kotak.
Munich Re’s Cyber offering in India can be broadly classified as Commercial Cyber and Personal Lines.
Commercial lines cyber policies are designed to cover the cyber risks faced by Large, Medium and Small commercial organisations. These policies cover data breach due to cyber incidents like ransomware, malware, etc. The coverage can be classified into first-party costs, including Business interruption, Third-party liability, and incident response cost.
“To help our cedants scale their SME/MSME portfolios, we offer an API based platform called CyRuss. This helps them manage the whole life cycle of cyber products, starting from quote generation, premium indication and finalization of terms and binding policy, and policy issuance,’’ he said.
“For large manufacturing companies, we offer innovative product solutions to cover cyber-induced property damage and affirmative cyber risk.’’
On personal lines, the approach is to design a modular risk-based cover to cater to the needs of retail buyers, which typically cover fund transfer losses, identity theft, cyberbullying etc.
Fund transfer losses are the major claims contributor, along with online shopping frauds, cautioned Kotak.
“MSME & SME corporations help penetrate cyber insurance to diversified sectors. Hence, we will continue to focus on the same through easy-to-understand products and customer-centric digital platforms, such as our Cyber Risk Underwriting & Solution Suite,’’ assured Kotak.
Of late a major factor for growth of the Indian cyber insurance market is pandemic-induced digitalisation, which has pushed cyber risk awareness and the need for cyber insurance.
“With businesses having to adopt work-from-home as a new normal, many were not ready to implement the technical infrastructure needed to support this change; the consequence has been an increased frequency of claims driving cyber buying decisions in first-time companies,” said Kotak. .
Assuming the government and insurance industry’s efforts of increasing cyber resilience with cyber Insurance (as the last layer of defence) for the MSME segment are successful, this effort will translate into significant growth in this segment based on digital underwriting automation provided by the re-(Insurance)-industry, Kotak predicted.
According to Kotak, retail cyber In India is still in the nascent stage of growth, and this growth will depend on alternative channels of distribution like attachment insurance to bank accounts, digital assets etc.
Currently, the cyber market in India’s neighbour countries like in Sri Lanka and Bangladesh is in the development stage, and Munich Re is starting to see awareness and proposals from large corporates from Sri Lanka, said Kotak, who from Mumbai oversees Munich Re’s expansion in these countries.