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Growing Demand for Cyber Insurance in India

By :
3 minutes, 36 seconds read

The COVID-19 pandemic has disrupted organisational functioning and intensified technological and financial risks. There has been an increase in internet usage as people are working from home, thus increasing the chances of cyber-crime. According to ICICI Lombard General Insurance, in the third week of June, hackers in China made 40,300 cyber attacks on India that were facilitated by COVID-19 scams. Considering the delicate situation rising from the work from home policies permitted by organizations, this is indeed the time for people to remain alert. Earlier cyber-security insurance was primarily accepted by corporate which are now being increasingly demanded by retail customers and individuals working from home.

Increase in Cyber Risks

Employees working from home have started their inquiry for cyber insurance. As companies are permitting work from home, individual policy for cyber insurance is likely to get established soon. Few common cyber risks include malware attack, phishing, spoofing, and identity theft, among others. Employees remotely logging in are making it easier for cyber criminals to conceal themselves while attempting to access systems with personal and sensitive data. Owing to the pandemic, the hackers are exploiting the current situation by luring people into clicking links containing malicious payloads. Some possible threats can be:

  1. Use of COVID-19 as a subject to carry out phishing,
  2. Malware distribution can be done through coronavirus themed lures,
  3. Registration of domain names having words related to coronavirus or COVID-19.

Growing Demand for Cyber Insurance

Increasing digitalization by businesses, rise in awareness of cyber security, uneasiness regarding the implications of GDPR and India’s Personal Data Protection Bill have led various companies to consider buying insurance. Demand for cyber retail cover is likely to come from millennial as they are the most internet savvy. In 2018, DSCI observed a 40% increase in cyber-security insurance purchase in India. The cyber insurance market is expected to grow globally at a CAGR of 27% from INR 29,400 in 2017 to INR 1.59 lakh crore in 2024.

The Chief Technical Officer of Bajaj Allianz General Insurance Sasikumar Adidamu said that as work from home has led employees to use their own home system, they might not necessarily have the kind of firewall that is present in the office system. They are expecting a demand for insurance as surge in internet usage has increased the likeliness of cyber fraud incidents. Bajaj Allianz General Insurance has not only witnessed a surge in inquiries, but has also been approached by companies to increase the limit of cyber cover as they are now experiencing the possibility of future cyber risks. ICICI Lombard that earlier used to get enquiries from BFSI and IT companies, is now getting contacted by various sectors like education, SMEs and hospitality. IT, telecom, e-wallet service providers, telecom, banks, financial institutions have majorly demanded for cyber security as they handle a large amount of data. But lately traditional manufacturing and infrastructure companies have begun to demand as well. 

Insurance companies offering cyber insurance 

  1. Bajaj Allianz: Bajaj Allianz started retail cyber security in the end of 2017. They have seen a CAGR of approximately 50 percent in premium in its cyber insurance portfolio. They provide cover against identity theft, phishing, Email spoofing, cyber extortion, media liability, and malware attacks, among others. 
  2. ICICI Lombard: they provide protection against cyber and digital risks that result in financial loss. The Retail Cyber Liability Insurance policy by ICICI will provide cover against cyber bullying, malware intrusion, and cyber extortion, among others. It also covers ‘individual lost wages’ and ‘reputation injury’. 
  3. HDFC Ergo: they cover all the devices under a single insurance plan. Regardless of the age of the children, their policy covers the whole family from cyber crimes. It provides protection against phishing, email spoofing, and damage to e-reputation.   

Conclusion

Cyber insurance has a huge potential in mitigating cyber loss. As several insurance companies are providing policies that cover an entire family and protection against damage to e-reputation, it plays a significant role in protecting against cyber crime. As the ‘better normal’ is witnessing employees comfortably working from home, growth in demand for insurance is certain as a huge amount of sensitive data is being handled remotely.

Further reading:

  1. Contactless Solutions in Insurance
  2. The CIO guide to keeping operations up during pandemics
  3. COVID-19 Lockdown Effects: A Paradigm Shift in Indian Edtech
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Retention playbook for Insurance firms in the backdrop of financial crises

4 minutes read

Belonging to one of the oldest industries in the world, Insurance companies have weathered multiple calamities over the years and have proven themselves to be resilient entities that can truly stand the test of time. Today, however, the industry faces some of its toughest trials yet. Technology has fundamentally changed what it means to be an insurer and the cumulative effects of the pandemic coupled with a weak global economic output have impacted the industry in ways both good and bad.

Chart, line chart

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Source: Deloitte Services LP Economic Analysis

For instance, the U.S market recorded a sharp dip in GDP in the wake of the pandemic and it was expected that the economy would bounce back bringing with it a resurgent demand for all products (including insurance) across the board. It must be noted that the outlook toward insurance products changed as a result of the pandemic. Life insurance products were no longer an afterthought, although profitability in this segment declined over the years. Property-and-Casualty (P&C) insurance, especially motor insurance, continued to be a strong driver, while health insurance proved to be the fastest-growing segment with robust demand from different geographies

Simultaneously, the insurance industry finds itself on the cusp of an industry-wide shift as technology is starting to play a greater role in core operations. In particular, technologies such as AI, AR, and VR are being deployed extensively to retain customers amidst this technological and economic upheaval.

Double down on digital

For insurance firms, IT budgets were almost exclusively dedicated to maintaining legacy systems, but with the rise of InsurTech, it is imperative that firms start dedicating more of their budgets towards developing advanced capabilities such as predictive analytics, AI-driven offerings, etc. Insurance has long been an industry that makes extensive use of complex statistical and mathematical models to guide pricing and product development strategies. By incorporating the latest technological advances with the rich data they have accumulated over the years, insurance firms are poised to emerge stronger and more competitive than ever.

Using AI to curate a bespoke customer experience

Insurance has always been a low-margin affair and success in the business is primarily a function of selling the right products to the right people and reducing churn as much as possible. This is particularly important as customer retention is normally conceived as an afterthought in most industries, as evidenced in the following chart.

Chart, sunburst chart

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        Source: econconusltancy.com

AI-powered tools (even with narrow capabilities) can do wonders for the insurance industry at large. When architected in the right manner, they can be used to automate a bulk of the standardized and automated processes that insurance companies have. AI can be used to automate and accelerate claims, assess homeowner policies via drones, and facilitate richer customer experiences through sophisticated chatbots. Such advances have a domino effect of increasing CSAT scores, boosting retention rates, reducing CACs, and ultimately improving profitability by as much as 95%.

Crafting immersive products through AR/VR

Customer retention is largely a function of how good a product is, and how effective it is in solving the customers’ pain points. In the face of increasing commodification, insurance companies that go the extra mile to make the buying process more immersive and engaging can gain a definite edge over competitors.

Globally, companies are flocking to implement AR/VR into their customer engagement strategies as it allows them to better several aspects of the customer journey in one fell swoop. Relationship building, product visualization, and highly personalized products are some of the benefits that AR/VR confers to its wielders.  

By honoring the customer sentiments of today and applying a slick AR/VR-powered veneer over its existing product layer, insurance companies can cater to a younger audience (Gen Z) by educating them about insurance products and tailoring digital delivery experiences. This could pay off in the long run by building a large customer base that could be retained and served for a much longer period.

The way forward

The Insurance industry is undergoing a shift of tectonic proportions as an older generation makes way for a new and younger one that has little to no perceptions about the industry. By investing in next-generation technologies such as AR/VR, firms can build new products to capture this new market and catapult themselves to leadership positions simply by way of keeping up with the times.

We have already seen how AR is a potential game-changer for the insurance industry. It is only a matter of time before it becomes commonplace.

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