Indian companies are digitising their workflow and are slowly waking up to the importance of cyber-risk management. But the cyber-insurance market in India is only a small fraction of the total annual cyber-loss incurred by these enterprises. Here's how it can seek more capital and serve better with the help of insurance-linked securities
The overarching root issue with a big gap in the supply-demand dynamics of current enterprise cyber-insurance markets in India is the lack of enough capital with re-insurers and insurers for them to scale their businesses. In 2018, the Data Security Council of India (DSCI) observed an ₹29,400 crore cyber-insurance market—a 40 percent increase in cyber-insurance purchases by enterprises in India from 2015. However, over the next four years that spanned the Covid-19 pandemic period, the growth in the cyber-insurance market has ‘flattened’ enough to fall much short of its projected target of ₹1.59 lakh crore by 2024 (when measured by the CAGR since 2018 market valuation). This—despite the total cyber-loss market being on the order of ₹15 lakh crore—implies that the cyber-insurance market in India provides third-party coverage for only a small fraction of the total annual cyber-loss incurred by enterprises.
[This article has been published with permission from IIM Calcutta. www.iimcal.ac.in Views expressed are personal.]