Money & Banking

RBI can consider having a compulsory cyber risk policy for all banks, Sanjay Kedia

Surabhi Mumbai | Updated on October 08, 2019 Published on October 08, 2019

Sanjay Kedia, Country Head and CEO, Marsh India Insurance Brokers

With over 5,000 corporate clients in the country, Marsh India remains bullish about the country’s insurance market.

In a conversation with BusinessLine, Sanjay Kedia, Country Head and CEO of Marsh India Insurance Brokers highlighted that cyber and natural calamities are big risks, and said that most companies are under prepared for these threats. Edited excerpts:

How is Marsh doing in India after the parent increased its stake to 49 per cent earlier this year?

This year we touched 5,000 corporate clients in India, which we believe is a big milestone in our journey. We got the license in 2003. In 2008, we had about 800 corporate customers. On an average, we have added 400 new corporate customers every year. We are present in 17 cities, with 18 offices and we are roughly 700 employees.

What, according to you, is the biggest risk for companies in the Indian market?

We recently concluded a study in partnership with RIMS, and the top risk which came out was cyber and natural calamities, and risk in economy in terms of oil price shocks. The failure of financial institutions and banks causing disruption in the market was also highlighted as a risk. These are seen as the main risks.

How well are Indian banks prepared to deal with cybercrimes, phishing and other such frauds?

All banks are talking about it. But have they done it? The answer is no. Private sector banks are ahead in term of taking the appropriate cyber insurance policy, but they can do better by having better coverage and better limits.

A good number of public sector banks have taken it, but the coverage and limits are still small. If they have a policy of ₹25 crore loss limit, it is hardly anything given the size of their operations.

All banks are highly dependent on technology. The size of the policy is very critical. We believe that the banking regulator can consider having a compulsory cyber-risk policy for all the banks. Globally, crime and fraud is one of the biggest risks that is transferred by banks to insurance companies.

Large and mid-sized banks should have anywhere between ₹200 crore to ₹1,500 crore as crime and cyber cover.

What about property insurance and the risk cover against natural calamities?

Asset insurance is what people buy for fire insurance and industrial all-risk policies. However, a good number of corporates do not buy business interruption risk cover due to these calamities. Our studies reveal that due to interdependence of business to suppliers and customers, there are consequential losses which arise from this. Business interruption could also be due to a fire or anything.

Will the government’s Budget announcement and the increase in cap for insurance intermediaries improve FDI in India?

The NITI Aayog and Prime Minister Narendra Modi have spoken about a $5 trillion economy. This can be driven by bringing more investments and the government is open to increasing FDI across sectors.

Published on October 08, 2019
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