Cyber Insurance Policies See Rising Demand in Tier 2,3 Cities

Posted on: Nov 7, 2022 | 3 mins | Written by: HDFC ERGO Team

Cyber Insurance Policies See Rising Demand in Tier 2,3 Cities

Published on November 04, 2022. EST READ TIME: 3 minutes

Cybercrimes would easily qualify as one of the biggest threats that we all face. As more devices get online and internet penetration gets deeper in the country, the chances of such offences also increase several folds. There are a few precautions that individuals can take but they will not ensure total safety. Opting for a cyber insurance policy in such times can be the smartest decision. Insurance companies have seen a lot of demand for new-age products such as cyber insurance from tier-2 and tier-3 cities.

A recent survey shows that a considerable number of people have opted for cyber security policies in India. As per the outcome of the survey more than 23% of the participants of the survey had cybersecurity coverage. This is significant considering that the penetration of insurance is still relatively low in India. In fact, health insurance plans and life insurance plans have low penetration rates in the country.

The survey intended to know the awareness of different insurance policies and verify if there is an uptrend in emerging products in the country. This exercise was intended for National Insurance Awareness Day 2022.

The afore-mentioned survey was carried out by an insurance aggregator on 4500 of their existing customers as well as visitors to the website and their smartphone app. Primarily this was to know about the awareness of lesser-known insurance products such as mental health insurance, pet insurance, cyber insurance, and home insurance.

How the Demand is Rising

Once the results of the survey were analyzed, it was found that there is a great deal of scope for purchase and consideration of products such as pet insurance, mental health insurance and home insurance. Cyber security policy is an exception. Something remarkable that came out of the survey is that about 48% of the participants from tier-2 and tier-3 cities had either bought insurance policies or were willing to invest in insurance policies. This is in stark contrast to the 36% of participants from the tier-1 cities of the country.

It is no secret that there has been a steady growth of internet consumption in tier-2 and tier-3 cities. However, what is more, impressive is the awareness to safeguard themselves against these higher consumption levels. Though cyber insurance policies are still in their nascent stages, they might be the next big opportunity for insurance providers. And the results of the survey clearly show the same.

31% of the participants from tier-2 cities and 29% of the participants from tier-3 cities are willing to purchase cyber insurance in India. On the other hand, only 16% of the participants from tier-1 cities are willing to buy similar policies. However, the numbers are a little bit different when you consider the people who have purchased cyber insurance policies. Out of the total number of people who have opted for the plan, 20% are from tier-1 cities and 17% of the policyholders are from tier-2 and tier-3 cities. These numbers show the growing awareness that people have regarding their digital assets and how to tackle any threats regarding the same.

Apart from the growing demand in tier-2 and tier-3 cities, there is something interesting that has come up during the surveys. It was found out that a lot of families are inclined towards buying a family cyber security plan. About 45% of the total number of people insured with cyber security insurance opted for family plans. The next 35% of the insured bought individual cyber security plans while the remaining 20% of the insured were covered as a part of the corporate plan. And even more encouraging was the number of people who were interested to purchase family cyber security plans. 53% of the total number of people who are willing to buy insurance would opt for cyber insurance in India, which is the highest among all types of insurance. These numbers suggest that policyholders are not only interested in cyber security policy but want it for the entire family. These are encouraging numbers to say the least.

Reasons for the Rise

A constant rise in the number of cyber security attacks in the country is one of the prime reasons for the growing demand for cyber insurance in India. There is a need to keep yourself safe against compromised emails, malware attacks, cyber attacks on software and machinery, crypto-jacking, or even instances of disgruntled employees causing damages.

Banks, information technology services and non-banks were the first ones to buy cyber insurance in India. Since the digital systems, they had in place had higher exposure to cyber threats. The policy was also needed to keep financial transactions safe. A lot of startups and manufacturing companies are also realizing the importance of cyber threats and the impacts that they can have on their business. Thus, they have started opting for cyber insurance policies.

In the recent past, we have seen a few business entities being brought to a grinding halt due to cyberattacks. A manufacturing giant recently had to purchase cyber security insurance because an attack meant that it had to suspend its operations. This not only does a great deal of damage to the image of the company but also results in a considerable loss of revenue.

For individuals, the losses can be significant as well. There are a lot of examples of cyber fraud being committed on a regular basis. And with higher penetration of internet services, the risk associated only increases. There is a lot at stake for individuals with a lot of their financial and social information available over the internet. These policies are designed for individuals and safeguard them and not the devices that they use or the platforms that they use. An increase in cyberbullying, fraudulent usage of financial apps, and identity theft are some of the perils that one might have to encounter.

Nearly 20% of all the participants of the above-mentioned survey had lost money in some form due to cybercrimes. As a result of which, 24% of the individuals decided to buy a cyber security policy, while another 39% neither proceeded with the purchase nor are considering buying one. Financial loss due to cybercrime or fraudulent transactions is one of the prime reasons for individuals and families to consider the policy.

Conclusion

Though cyber insurance policies have been around since 2014, they are only picking up in popularity now. A lot of individuals have been victims of identity theft and have lost money due to cybercrimes and cyber frauds. There is a growing concern among individuals and families about safety from such cybercrimes. Thus, the demand for such policies is constantly on the rise. Internationally also there has been a similar trend, where the demand has grown several folds in the past few years.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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