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Our Bureau

Mumbai , July 15

INSURANCE coverage is expected to increase two-fold as the perception of risk is on the rise on the back of recent episodes of the alleged sale of British customers' data and the siphoning off of funds of Citibank clients.

Mr V. Ramakrishna, Managing Director of India Insure Risk Management Services, said that companies in the IT sector are increasingly opting for `fidelity' covers.

While they may look for covers in the range of $5-6 million, this figure is likely to double with more such incidents coming to light, he added.

India Insure handles around Rs 100 crore of premium and has 220 customers.

All IT-related insurance policies are customised to the needs of the client. They broadly cover the areas of `Technology errors and omissions', `Directors and Officers policy', and `Employment Practices Liability policy' or fidelity covers.

There might be a variation if the IT company is a product provider or a software provider. In the case of a product provider, an intellectual property rights policy could also be thrown in.

Fidelity covers in particular insure against employee dishonesty as well as third party claims. They cover losses that arise out of "malicious intent".

Mr Ramakrishna said that while companies might purchase professional indemnity covers up to $60-75 million, the percentage of fidelity covers accounts for just 15-20 per cent.

It has been estimated that companies worldwide lose 1-2 per cent of their revenues annually on an average on fraud.

ICICI Lombard, Tata AIG, and HDFC Chubb are the main players in the area of liability insurance, which accounts for just 2-3 per cent of the insurance market.

With the tightening of the BPO sector, insurance companies are now making sure that the companies they insure maintain strict internal security standards, have a risk management cell, and conduct a proper system of evaluation while recruiting employees.

According to Mr Ramakrishna, the most typical losses that take place in the $3.8-billion BPO industry are employee theft, forgery of cheques, computer frauds such as diverting of funds from one bank account to another, and stealing intellectual property.

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