Cyber security a concern for banks, demand for cyber insurance increases

Mumbai: Over the last few years, inclination of citizens towards internet banking has increased and due to smartphones, there is an increase in cashless transactions. However, there has also been an increase in the number of cyber attacks and cyber fraud cases. Against this backdrop, there appears to be a rise in the demand for ‘Cyber Insurance’ and ‘Cyber Liability Insurance’ from banks.

Currently, there has been a huge surge in the use of Internet and Mobile Banking. Additionally, many E-Wallets are available in the market and their use has also increased. However, although there is a rise in cashless transactions, banks are also concerned about cyber security. Also, in the last few years, there has been a considerable increase in the number of cyber attacks all the same. Only a few months ago, due to a virus that entered the ‘Hitachi Payment Services’ system, the debit cards of 30 lakh SBI customers were corrupted. Based on all such grounds, banks are devising a resolve in terms of security. Banks are making attempts to now provide insurance security to the customers for cyber security, said the Managing Director of SBI, Rajnish Kumar.

Mr. Kumar further informed that the banks are considering issuance of insurance, are contemplating over finalizing the insurance amount and whether that amount is in accordance with the bank’s strategy.

Due to the virus attack on ‘Hitachi Payment Services’, 32 lakh ‘ATM Cards’ of 5 banks were corrupted in the country. This included cards provided by SBI, HDFC BANK, ICICI BANK, AXIS BANK and YES BANK. SBI had not suffered any financial loss due to the corruption of cards. However, it appears that keeping security in mind and to avoid any financial loss, an insurance security cover is being contemplated.

One lakh cards of the Bank of Baroda were corrupted. Against this backdrop, the Managing Director of Bank of Baroda, P.S. Jayakumar said that they are planning to provide insurance security to their customers.

Currently, insurance security is being provided by New India, National, ICICI Lombard, TATA AIG, HDFC Ergo and Bajaj Allianz in India. Considering the growing threat of cyber attacks, there has been an increase of 20% in cyber security insurance and an increase of 15-20 % in the Cyber Liability Insurance as informed by insurance companies.