Cyber Insurance: IRDAI expands scope of coverage; asks companies to provide cover against monetary loss due to cyber fraud, unauthorized transactions, among others

In view of the rapid increase in online frauds amid the Covid-19 pandemic, the insurance regulator IRDAI has expanded the scope of cyber insurance and has made clear what things are covered under cyber insurance.

Insurance Regulatory and Development Authority of India (IRDAI) has asked companies to provide cover against monetary loss due to cyber fraud, unauthorized transactions, email spoofing etc.

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IRDAI's new instructions on cyber insurance:

1. The scope of cyber insurance will increase. 

2. Companies will simplify cyber insurance policy.

3. Cyber ​​risk increased due to increased digital exposure.

4. Cyber ​​damage divided into four parts that is first party damage, regulatory action, cost of crisis management and liability claim.

First Party Damage: Financial loss, loss due to disruption in business.

Regulatory Action: Regulatory investigation and action costs, penalties and other legal expenses.

Cost of Crisis Management: Forensic expert cover, loss of reputation, Cost of removal of information, cost of counseling.

Liability Claim: loss of privacy or data breach, defamation, breach of IPR.

As per the information, loss from money theft and identity theft, unauthorized online transactions, email spoofing, third party damage done through social media, reimbursement of stolen data, compensation for damage caused by phishing attack, cyber ​​extortion cover and cover of data breach and privacy breach will come under the purview of cyber insurance.

When can a cyber insurance claim be rejected?

A cyber insurance claim can be rejected if the card is not blocked within 24 hours of cyber fraud and on not providing mobile number and email ID which is registered with the bank for SMS and OTP.