Interestingly, cyber insurance happens to be seeing unprecedented progress in India, with a 100% policy renewal rate as businesses do recognize the rising occurrences when it comes to cyberattacks.
As per a study conducted by Policybazaar for business, the BFSI, which comprises 35 to 40% of the share, and the technology sector, which happens to have 30% of the share, are the leading adopters, holding a combined 70% market pie.
This study also finds out that the interruptions in the business that are caused due to breaches in data comprise 45% of all the cyber insurance claims, thereby reinforcing the crucial role when it comes to cyber coverage for business continuity.
The report further says that the penetration of cyber insurance happens to be the highest amongst mid- to large companies that have a yearly turnover of more than 10 crores, thereby reflecting a rising awareness in terms of cyber-attacks as well as regulatory requirements.
The sector-wise breakdown, as far as adoption is concerned, happens to be as follows:
BFSI comprises 35 to 40% – Due to the rising cases of financial fraud, regulatory scrutiny, and customer data protection mandates, financial firms happen to be the largest consumers of cyber insurance.
Technology and IT stand at 30% – Because of the fact that they rely heavily on data operations as well as high exposure to cyberattacks. IT and tech firms are indeed prioritizing risk mitigation by way of cyber insurance.
Start-ups at 25% – Notably venture investors along with contractual obligations Are driving the adoption when it comes to fast-growing start-ups.
Healthcare at 5% – Healthcare providers along with hospitals are growing, securing coverage against data breaches as well as ransomware.
Logistics with 5% – The growth of the digital supply chain has gone on to lead to a greater cyber risk, thereby prompting logistic players to invest in cyber coverage.
The study also goes on to underscore a prominent shift, with 30 to 35% of businesses buying cyber insurance for the very first time. It goes on to indicate that awareness is indeed spreading specifically among the mid-sized companies and also start-ups since they do gauge the financial and operational risks that are posed by cyber threats.
There are indeed more businesses that are moving from a reactive scenario to a proactive situation—rather than just waiting for the attack to happen. They are making sure that coverage is done in advance.
So what is driving cyber insurance claims?
The study also offers insights on why businesses are filing cyber insurance claims with business interruption due to breaches within the data making up the largest share of 45%.
With ransomware attacks as well as social engineering scams rising rapidly, organizations are turning to insurance so as to cover both their operational downtime as well as financial losses.
The report goes on to mention that the cyber insurance market has progressed at a very fast rate in the last 12 to 24 months by attributing the rising regulatory needs as well as contractual obligations.
Being regulatory compliant – Due to the stricter data protection laws and cybersecurity norms, businesses are compelled to enhance cyber resilience.
Contractual needs – Enterprises specifically within the BFSI as well as the IT segment now need vendors and partners to carry cyber insurance as part of their framework pertaining to risk management.
Assessment of risk- Organisations are identifying proactively the susceptibility and also securing coverage before the incident takes place.
The head of liability insurance at Policybazaar for business, Eva Saiwal, states that cyber insurance has shifted from a very niche product to a business requirement. An almost 100% policy renewal rate goes on to indicate that organizations view it as something that they have to have. Apart from the financial recovery, cyber insurance is also a major enabler of continuity in business. As the cyber threats rise by the day, integrating insurance within cyber risk management strategies will indeed be necessary for building a more robust digital ecosystem.
