Page 9 - Insurance Times December 2020

IRDAI

IRDAI mulls basic standard dian market and in other developed On the other hand, the move may be

policy for cyber attacks jurisdictions. The working group will positive for life insurance companies as
submit its report within two months.
the policies sold by them will continue
IRDAI has formed a working group, to to have the advantage of being able to
examine the need for standard cyber IRDAI's plan to prohibit act a collateral for securing housing or
liability insurance products. vehicle loans.
use of critical illness policy
Observing that cyber attacks are on as collateral for loan may It’s this reason why the General Insur-
the rise with a number of high-profile ance Council (GIC) has expressed its
data breaches amid the Covid-19 pan- affect nonlife industry reservation on the regulators move.
demic, IRDAI said cyber security is the IRDAI is exploring at prohibiting the According to letter written by GIC,
"most important need" for all sectors use of critical illness policies as collat- critical illness covers are taken by
today to address the numerous risks eral against housing or vehicle loans. people either to meet the treatment
posed by cyber attacks. costs or to manage the life style even
It's a common practice to have a life
insurance or a critical illness policy as after diagnosis of a critical illness.
The general liability policies do not
cover cyber risks, and cyber cover prod- a collateral for securing a housing or a IRDAI notifies Minimum
vehicle loan from various housing fi-
ucts currently available are highly nance companies (HFCs) and non-bank-
customised for clients. Information for Insurers,
ing finance companies (NBFCs). The Intermediaries and Insur-

"Hence, it is felt that a basic standard insurance policy acts as a security for
product structure is required to pro- the lender as the claims from the policy ance Intermediaries
vide insurance cover for individuals and can be used for repayment of the loan On November 23, 2020, the IRDAI has
establishments to manage cyber risks," installments in case the policy holder notified the IRDAI (Minimum Informa-
loses his life.
IRDAI said in a circular. tion Required for Investigation and In-
Critical illness policies are issued by spection) Regulations, 2020. The Noti-
The panel will study various statutory general insurance companies and they fication will come into force from May
provisions on information and cyber pay the insured individual a lump sum 24, 2021.
security to evaluate critical issues in- amount if diagnosed with any of the
volving the legal aspects of transac- specific illnesses on a predetermined The objective of the Notification is to
tions in cyberspace. It will also exam- list. Any move from IRDAI to prohibit specify the minimum information re-
ine the various types of incidents in- use of critical illness policies as collat- quired to be maintained by insurer,
volving cybersecurity in the recent past eral for securing loans may be negative intermediary or insurance intermedi-
and possible insurance coverage strat- for the general insurance companies ary, so as to enable the investigating
egies for those, and the cyber liability selling these policies as it may impact officer to discharge its functions under
insurance covers available in the In- their sales. Section 33 of the Act.
The Insurance Times, December 2020