By Manoj Rane, Sr. Vice President, Practice Head – Liability Vertical, Alliance Insurance Brokers
A recent report highlighted India as the primary global target for cyber-attacks, accounting for a significant 13.7% of all such incidents. The alarming trend reveals a staggering surge in state-sponsored cyber-attacks, soaring by 278% between 2021 and September 2023. Notably, services sectors, particularly IT and BPO firms, bore the brunt of these attacks. Over this period, government agencies faced a striking 460% increase in targeted cyber-attacks, while start-ups and SMEs encountered a staggering 508% surge in such incidents.
In the year 2022, the Indian Computer Emergency Response Team (CERT-In) handled 13, 91,457 incidents. The type of incidents handled were Website Intrusion & Malware Propagation, Malicious Code, Phishing, Distributed Denial of Service attacks, Website Defacements, Unauthorized Network Scanning/Probing activities, Ransomware attacks, Data Breach, and Vulnerable Services. If we look at the growth rate in Cybercrime; it is growing exponentially.
According to Cyber Security Ventures, the cost of cybercrime is predicted to hit $8 trillion in 2023 and will grow to $10.5 trillion by 2025 worldwide. The surge in cyber-attacks has sparked heightened awareness, driving up the demand for cyber insurance policies across the country. This increase in incidents has prompted insurance companies to reinforce their underwriting criteria and parameters. The country’s
cyber insurance market is currently valued at $50-60 Mn and poised to grow at a staggering compound annual growth rate (CAGR) of 27-30% in the next 3-5 years.
The good part is that the industry is recognizing the need for cyber insurance and the number of claims in the segment increased 20-25% in 2022-23 over the previous financial year. As per industry reports, around 70% of businesses across sectors are opting for cyber insurance coverage. However, the two sectors that require this cover the most: medical and IT and Telecommunications. The healthcare industry requires this coverage to protect all the patient data, and the IT/Telecommunications industry is most prone to ransomware
attacks as they hold a lot of customer data across the globe.
In the last two years, there has been stricter coverage terms and enhanced cyber risk management from the companies they insure. The underwriting of cyber risk is also done more carefully or vigilantly. In the quickly growing cyber insurance market in the country, reinsurers are playing a vital role by extending their capacities to insurers, so that they can underwrite larger risks. The capacities can be deployed with various types of treaties with insurers and on facultative basis. Reinsurance is pivotal in cyber insurance in India, where over 50% of cyber risks is transferred to reinsurers through Reinsurance Treaties or Facultative.
In the coming years, cyber insurance will grow at a fast pace and Insurers need support from reinsurers which will not only enhance cyber insurer’s financial performance and make their business more appealing to consumers but also help in improving the cyber insurance distribution in the country. Additionally, there is a need to educate the insured, to follow proactive risk management strategies to reduce the escalating financial implications of cyber threats in the country.
