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The Indian Banks Association (IBA) has asked its members to purchase cyber insurance, following several cyberattacks targeting lenders.
As financial services become more and more digitalised, cyber insurance is being regarded as a necessity for all financial institutions. However, some banks in India have yet to comply.
According to a report by Times of India, many of the larger banks have comprehensive cyber insurance policies, but many smaller lenders only have the Banker’s Blanket Bond. This policy covers risks like loss of cash in transit, bank robberies, physical fraud, and forgeries, but does not include cyberattacks.
Amit Agarwal, practice head at JLT Independent Insurance Brokers told ToI that the Banker’s Blanket Bond is a 40-year-old insurance policy, designed in an era when banks had yet to go online and even predating Tim Berners-Lee’s invention of the World Wide Web.
“We are also adopting the practice of circulating the modus operandi of frauds shared by members among others so that banks can take necessary precautions,” said IBA chairman Shyam Srinivasan.
Cosmos Bank, a small cooperative bank in Pune, was targeted by a malware cyber breach, which inflicted losses of around INR940 million (US$13.2 million). According to insurance officials, cooperative banks such as Cosmos usually do not purchase cyber insurance. But, as the recent cyberattack showed, it’s the smaller banks that are susceptible to more devastating losses.
