Rising ‘silent cyber risks’

Description

Context: With unknown cyber risks on the rise, the Working Group, set up by the Insurance Regulatory and Development Authority of India (Irdai), has proposed detailed regulations to address the issue.

Silent cyber

Silent cyber is the unknown exposure in an insurer’s portfolio created by a cyber peril, which has not been explicitly excluded or included.
This is also known as “unintended” or “non-affirmative” cyber coverage.
Cyber exposure is a concern for all underwriters.
Cyber affirmative and silent covers are scattered in many different products beyond standalone ones.
Cyber risk permeates all classes of insurance without boundaries of industries.
With technology improving and digital business expanding, silent cyber risks, especially in the banking sector, have also increased.
A cyber event can trigger losses across various lines of insurance — property damage and business interruption, resulting from computer systems failure or virus under property insurance, siphoning money through phishing under crime insurance, product liability or recalls from security vulnerabilities under product liability/ recall insurance, breach of contract or negligence claims under E&O (technology errors and omissions) insurance and for managerial negligence under D&O (directors and officers) insurance.
Cyber risks, involving unknown developments through the debit and credit cards, mobile phones and online deals, have raised concerns for insurers and the insured.
The working group said it is desirable now to focus on popularising the cyber insurance product, make it easier for insurer to adapt the product as per the customer requirements and continue to enrich customer’s experience and protection.