Indian banks are attempting to shield themselves from the backlash of online fraud by seeking insurance coverage.
India has seen fast Ecommerce growth as of late. With the rise in online transactions and purchases naturally comes a rise in online fraud. Data from Indian insurance firms shows large banks opting for Rs 500 crore ($8 billion) policies and mid-sized banks going for Rs250-300 crore ($4-$4.8 billion) policies to help protect them from online fraud.
“Demand for insurance policy against phishing, skimming and Internet hacking has gone up in the last one year. Enquiries have gone up and we are working on how to price the product and working on the wording,” said TR Ramalingam, head of underwriting at Bajaj Allianz General Insurance.
During 2012-13 Indian banks lost banks lost Rs 17,284 crore ($2.8 billion) to fraud. Until these figures, insurance companies did not offer cyber-fraud protection to financial institutions. The new policies, which are becoming more and more common, have 1% and 2% percent liability. During 2012-13 a total of 62 banks filed 26,598 cases due to events of online fraud.
“The policy covers cyber extortion and breach of data privacy. There is a lot of talk around cyber insurance and people are actively looking to secure these exposures,” said M Ravichandran, president, Tata AIG General Insurance.
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Insurance firms like Tata AIG General Insurance also offer policies covering cyber-extortion. Cyber-extortion is when a cyber-criminal gains access to a banks record and data, offering to step back in exchange for a certain amount.
Last year, the ATM cards of a leading Indian bank were skimmed resulting in Rs15.48 lakh being stolen from account holders.
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