Remote working to push demand for cyber insurance: IRDAI official

With remote working becoming a norm, the insurance industry is likely to see a spurt in demand for cyber insurance, according to a senior IRDAI official.

In the long term, the transition to virtual workspaces resulting from COVID 19 may increase the demand for cyber insurance and further the evolution of cyber insurance products, Insurance Regulatory and Development Authority of India (IRDAI) Executive Director Suresh Mathur said.

He was speaking at a virtual seminar organised by the Confederation of Indian Industry (CII).

Mathur said the demand for cyber insurance coverage will come from the government entities and large organisations that are operating in higher hazard sectors.

He said with business interruption at the centre of property and casualty losses, there will be pressure on insurers to cover claims.

"The impact of COVID 19 on business interruptions claims will largely depend on the policy wordings, he noted.

He said the evolving situation may also force a review of the pricing of the existing insurance products in the light of changing claim experience in each segment.

Insurers are confronting a new reality in the COVID-19 situation as a long- term disruption to the customers, employees, investors and suppliers. The impact of the pandemic on insurance products will vary according to the cover insurers offer, Mathur said.

While health (insurance) products are likely to bear a direct impact, property and casualty (insurance) products, covering business interruptions, will witness different degrees of impact as the result of lockdowns, he mentioned.

Mathur believes that the Covid19 outbreak is unlikely to have an adverse impact on the financial results of insurance companies.

The only two segments affected in the country are health and travel, he said.

Despite the increased possibility of claims under health and travel segments, most of the general insurers will remain unaffected because of the improved loss ratio in the automobile segment, he said.

Mathur said going forward, insurers can adopt a phased approach to identify and address themes that are disrupting their existing business.

"There is a need for them (insurers) to evolve long-term strategies with business models fostering virtual interactions across the value chain, a lean and agile technology architecture and enterprise and cyber resilience, he suggested.