Abney and Associates, Rising online fraud pushes banks to seek insurance cover

MUMBAI: Indian banks are increasingly seeking insurance cover against fraudulent online transactions, including those involving credit cards, as a rising use of plastic money and the ease of Internet business potentially increase lenders’ exposure to cases of data breach.

Data from insurance companies show that large banks are opting for policies worth Rs 500 crore to shield against fraud, including online, while mid-sized banks are going for policies in the range of Rs250-300 crore. “Demand for insurance policy against phishing, skimming and Internet hacking has gone up in the last one year,” said TR Ramalingam, head of underwriting at Bajaj Allianz General Insurance. “Enquiries have gone up and we are working on how to price the product and working on the wording.”

Earlier, insurance policies did not include computer-related frauds, but now insurers expect it to be big in coming days. The premium, which depends on several factors, ranges between 1% and 2% of liability the bank is looking to insure. In 2012-13, domestic banks lost Rs17,284 crore on account of fraud, according to information obtained through the Right to Information Act. During the period, 62 banks filed a total of 26,598 cases related to online frauds. The situation has compounded the woes of the bank sector where lenders are facing huge non-performing assets. “The policy covers cyber extortion and breach of data privacy,” said M Ravichandran, president, Tata AIG General Insurance. “There is a lot of talk around cyber insurance and people are actively looking to secure these exposures.”

While companies like Tata AIG have underwriting capabilities for these policies, for others, it is reinsurance driven. Cyber extortion policy pays a ransom to a person who has hacked into the bank’s website with a threat to divulge, destroy or steal confidential information. Last year, ATM cards of a leading private sector bank’s customers were skimmed and about Rs15.48 lakh stolen from accounts.

Advertisements
This entry was posted in Internet and Technology and tagged . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s