Product Review. Secure enough?

With the digital world becoming a part and parcel of our lives, the risks associated with it have also increased — not only for corporates but also for individuals. HDFC ERGO General Insurance has launched a cyber insurance product — E@Secure Insurance — to protect individuals from cyber attacks. However, there are certain limits to the cover and one has to meet certain criteria for the cover to be applicable.

What’s on offer

The product offers a sum insured of ₹50,000-1 crore at an annual premium of ₹1,410-14, 273. One can also include his/her family in the policy. Family here includes individual, spouse and a maximum of two dependent children. The sum insured for the family extension cover is ₹5 lakh-1 crore with a premium of ₹6,167-22,907.

The policy offers protection against nine types of risks including identity theft, e-extortion, phishing, e-mail spoofing and unauthorised online transaction. For an extra premium, you can get protection against malware attacks on your digital assets, too. The premium in such cases is ₹1,551-15,700 for a cover of ₹50,000-1 crore.

Policy cover

Among the nine threats covered under the policy, the policyholder is compensated for financial loss, if any, only in the case of phishing, e-extortion and unauthorised online transactions (only to the extent of what cannot be recovered legally).

In all other cases, there is no compensation for any financial loss. Only the costs incurred on resolving the problem — including cost of employing an IT professional to recover the lost data, removing any harmful publication online and consultation with a psychologist — will be reimbursed. In addition, lost wages due to time taken off from work (not more than seven days) to rectify the records on any unauthorised breach/identity theft, will also be paid.

If you have a legal dispute over any of the risks specified under the policy, the insurer will also provide the legal expenditure. However, note that in case of cyber bullying, e-extortion and damage to e-reputation, the policy has a waiting period of 45 days.

Also, the policy has liability limits (how much the insurer will pay) — to a maximum of 25 per cent under damage to e-reputation, identity theft and email spoofing; 15 per cent in case of phishing; up to 10 per cent for psychological counselling, e-extortion, cyber bullying and protection against digital assets from malware. The insurer will, however, compensate for the full cost of any legal assistance taken by the policyholder on facing the stated threats.

One should also note that for a compensation of over ₹50,000, the deductible amount is ₹3,500.

Duty of policyholder

The company expects policyholders to lodge an FIR within 72 hours of the breach/threat. Policyholders should also have taken reasonable measures to protect personal and confidential information, such as timely and regular update of system, maintenance and back-up, and setting strong passwords. Further, the insured should also provide evidence that he/she has been affected and the threat has resulted in loss, financial or otherwise.

Our take

The only other cyber insurance product in the market is Bajaj Allianz’s Cyber Safe Insurance, which covers almost the same risks as HDFC ERGO’s E@Secure. The Bajaj Allianz’s plan looks better as there is no waiting period or deductible.

Further, when you are under attack from various cyber threats simultaneously, the Bajaj Allianz policy lets you decide which risk you want to be compensated for. Under HDFC’s E@Secure, the company will compensate only for the risk which has the highest sub-limit (to ensure least outgo for the company).

The Bajaj Allianz policy is cheaper on the premium front, too.

The one thing that is unique to E@Secure is its family cover. Given children’s exposure to digital media these days, this is an added advantage. Also, while in Bajaj Allianz’s Cyber Safe Insurance, there is no cover for unauthorised online transactions (bank accounts, debit/credit cards), E@Secure covers them.

However, note that given the several ‘ifs’ and ‘buts’ attached to the benefits under the policy, one is not sure how useful cyber insurance policies will be, be it Bajaj Allianz’s Cyber Safe Insurance or E@Secure. The products need to evolve; insurance companies need to examine whether the liability sub-limits and deductibles could be removed to make them attractive.

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