Hyderabad:
With rising incidences of cyber attacks along with a growing number of high profile data breaches, the insurance regulator IRDAI while unveiling a new guidance document on Thursday, has advised all general insurers not only to adopt model policy wordings for Personal Cyber Insurance cover and common reference framework as provided in the regulatory norms on cyber insurance policies and coverages, also to be innovative to design tailor-made products to meet the demand of customers.
The main objectives of new the guidance document on product structure for Cyber Insurance are;to enable insurers to evaluate new technologies posing heightened cyber risk, identify protection gaps in the existing products and address the changing needs of market,to facilitate insurers in developing stand-alone cyber insurance products, specifically designed to address the evolving cyber risks,to provide a set of recommendations on maximum possible coverages that could be included in the cyber insurance products, to encourage insurers to adopt best practices and provide additional covers in response to customer needs, to improve the development of the cyber insurance market with new products and enhance benefits for policyholders, explained the IRDAI.
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 and should review the product structure to meet the new demands in the market, said the IRDAI.
The filing of the such product/s may be undertaken at the earliest to respond to the needs of customers who are increasingly exposed to the cyber threat of digital services.
The model product structure and suggested insurance coverages brought out in the irdai's guidance documents are indicative and not intended to be an exhaustive list of requirements. In addition to common reference framework contained in the document, it is equally important for insurers to consider the emerging insurable cyber perils and provide to customers a core insurance protection against cyber risks.
Earlier,a Working Group, constituted by the IRDAI, after conducting wide consultations with various stakeholders, and after internal deliberations had 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.
The online exposures for individuals, business organizations, offices and other establishments continue to increase more so in the current pandemic situation, said the IRDAI.
The general insurers can also expand the scope of cyber risks included in the traditional policies for the benefits of policyholders. However, the insurers may be mindful of overlapping coverages in cyber insurance policies and other types of insurance policies currently covering cyber risk with limited scope.
Cyber insurance, being a new product, is supported by international reinsurers for the innovation, technical knowledge, product wording and various other services. Instead of a standardized wording they may prefer to use coverage and exclusions as per the latest development in the market.\
To increase penetration of the product various distribution channels have to be used and this will require flexible approach in coverage and services. It is good to allow market to explore, innovate and invest in the product proposition along with various risk management services.
Standardisation of the cyber policy wordings for individuals may hamper the developments of this product in Indian market. It is important now to focus on popularising the Cyber insurance product, make it easier for insurer to adapt the product as per the customer requirements and continue to enrich customer’s experience and protection..However, Insurers can build in certain minimum covers as a part of individual cyber insurance. The model policy wording as outlined by the IRDAI can be considered by the insurance industry as a reference point to provide minimum basic coverage.