India is currently home to about 700 million internet users, penetrating 47% of the country’s population. And this number is only set to touch 900 million by 2025, as per an IAMAI-Kantar ICUBE report.
The rise in internet usage is not devoid of its share of frauds and cyberattacks, which are also surging dangerously in recent times. Unsurprisingly, the area of preference here remains finance. Fraudsters try to steal an individual’s financially sensitive information such as credit/debit/banking information via ransomware attacks or more.
According to the data shared in Lok Sabha in August 2022, India saw 50,242 cases of financial fraud online between 2021 and 2022, amounting to a whopping Rs 167.03 crore. Of this, only Rs 11.70 crore could be recovered.
GRIM PICTURE
Despite the RBI data showing a marginal decline, the rot persists. Data from the apex bank traces a fall in the amount defrauded, as reported by banks via debit/credit/ ATM or internet banking. From Rs 185 crore in 2019-20 to Rs 160 crore in 2020-21 to Rs 128 crore in 2021-22, a gradual reduction is evident.
But this does not begin to cover the thriving cyberfraud scene in India. Data from the National Consumer Helpline showed a spike in the number of grievance calls related to cyber frauds. The number jumped almost four times from 851 in 2020-21 to 3,277 between 2021 and 2022.
The 2021 National Crime Records Bureau report also points toward an unprecedented rise in such cases. While registrations of cybercrime instances grew by 5.9% over 2020, which saw 50,035 cases, the crime rate in this segment also saw some growth.
A CISCO report noted the adverse impact of these frauds on small businesses in the country. Notably, 62% of them lost more than Rs 3.5 crore to cyber fraud in the last year.
Ritesh Chopra, Director of Sales and Field Marketing, India & SAARC Countries, NortonLifeLock, highlighted these growing dangers. “The rise in cyberspace usage by hackers and scammers has compromised our trust in it. According to the latest Norton report, we have blocked more than a billion attacks in Q1 2022, or 11 million cyber-attacks per day. The internet has evolved into a dangerous space where criminals run different types of scams. The most recent and latest ones are the deep fakes that are created using machine learning and artificial intelligence wherein hackers create fake profiles and gain access to banking accounts or social media profiles. Scammers are using innovative ways to avoid getting detected or defrauding people.”
Evaa Saiwal, Practice Leader, Liability & Financial Risk, Policybazaar, agreed, noting that along with accelerated digitisation, the occurrence of cyber extortion, malware attacks, and phishing has also grown.
“Any cyber-attack can substantially result in a financial loss for companies and individuals. Therefore, it is time to tighten security measures with the help of comprehensive cyber insurance. Since the pandemic, the number of cyber-attacks increased by over 200% between 2019 and 2021 targeting individuals, small businesses, and large corporates. The demand for cyber insurance is surging amongst corporates opting for a higher sum insured. Likewise, demand for individuals seeking cyber insurance is also increasing, a policy that was previously limited to corporates only,” she continued.
Rakesh Jain, CEO of Reliance General Insurance, said, “With regard to corporate cyber insurance, we have seen ransomware attacks in nearly all industries, including aviation, oil, and fintech. Apart from a few major incidents, most attacks have been low in magnitude but high in frequency, especially in the fintech space. While the overall insurance penetration in this regard is significantly low, there has been a steady y-o-y growth in the number of insured corporates, indicating higher risk perception and awareness among them.”
CYBER INSURANCE
Globally, the cyber insurance market is poised to grow at a 27% CAGR, touching Rs 1.59 lakh crore in the next two years.
While crypto-crimes are yet to come under the ambit of cyber insurance, most general plans, like that of HDFC Ergo and ICICI Lombard, cover loss of money from a bank account, legal charges involved in suing for identity theft, damage caused by malware, ransomware, counseling services and more. Additionally, phishing, privacy, and data breaches are also provided for.
Premiums vary, depending on the plan. For ICICI’s plan, it ranges from Rs 6.5 to Rs 65 per day. Consequentially, the sum assured also stands between Rs 50,000 and Rs 1 crore. Generally, for a policy worth Rs 1 lakh, the premium can start from Rs 700 and go on till Rs 2,000. Effective for 12 months, these policies are sold as separate sachets, with the customer bundling them up per their requirements.
Jain said, “Individual (retail) cyber insurance has been in the industry for almost five years. However, cyberbullying has become a significant threat with the higher degree of digitization post-pandemic. Unfortunately, cyber insurance awareness is still very low, and the cyber insurance penetration at the retail level is insignificant in the country. To raise awareness and promote higher penetration, bundling and packaging this product rightly and in bite-size is necessary, along with the right tie-ups and affiliations to market it.”
“Adopting a cautious and steady approach to cyber insurance is the way forward. Further, physical audits, cyber audits, and increased scrutiny are imperative for higher penetration,” he explained.
AI and machine learning are also increasingly being used to detect and counter cyber fraud. As per insights from the Data Security Council of India, about 75% of companies in this space employ artificial intelligence and machine learning to detect and counter cyber fraud.
“With digital and cloud adoption at its peak, the cyber threat landscape is continuously evolving in terms of both scale and sophistication.We must constantly stay vigilant against a whole host of bad actors. This includes targeted e-crime syndicates who adapt quickly to the latest vulnerabilities, malicious players who leverage stolen credentials or amplify ransomware attacks, and even the rise of state-sponsored adversaries who are evading detection through increasingly sophisticated measures,” said Sajan Paul, MD & Country Manager, India & SAARC, Juniper Networks.
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