Naavi has been repeatedly emphasizing the need for banks to provide mandatory Cyber Insurance for the benefit of the customers as a support to the technology related innovations which have changed the threat landscape in the Banking industry.
While new technologies have reduced the costs and improved the profits of Banks, the customers are left to handle the increasing risks in exchange of the “Convenience” which is part of the new life style to which we are getting accustomed to.
The possibility of a major Cyber Heist wiping out the bank accounts of a large number of Bank customers and eventually the Bank itself is looming large on the Indian scene and I repeat that Mr Modi and Arun Jaitely will be considered unimaginative if they donot see the risk and take steps to mitigate the risk.
In this context, it was refreshing to hear that a Los Angeles bank namely Grand Point Bank introduced cyber insurance policies for it customers for covering against wire-transfer fraud schemes.
According to the report, ” the coverage includes losses from wire-transfer scams including business email compromise. In business email compromise schemes, fraudsters pose as executives or vendors from a business, sending requests for money transfers to accounts controlled by criminals.”
FBI data shows that criminals have sought to use such “Business Email Compromise scams” to steal more than $3 billion since June 2013.
The policy, which is underwritten by Hiscox Inc, a unit of Hiscox Ltd, costs $30 to $70 per month for up to $1 million in coverage.
India also have seen many such incidents and instead of exposing the business to such risks, companies would be happy to spend some money and cover the risks.
We look forward to Insurance companies in India pushing such policies and Banks adopting them.
However, unless the Government or the new RBI Governor who may take over RBI Governance in the next couple of months takes this up as a part of its initiative to secure E-Banking in India, it is unlikely to be a reality.
The regulators should however ensure that the cost of such insurance should be shared between the Bank and the Customer with a weightage of at least 70% for the bank and 30 % for the Corporate customer. The risk sharing may be higher for the Banks at 90%:10% for the retail customers.