There are no express provisions for cyber insurance in Nigeria despite projections that global cyber insurance premiums could hit a whopping $28 billion by 2026.
While Fitch Rating projected that cyber insurance will have its global worth estimated to increase to over $28 billion before 2026, Statista pegs the figure at $20 billion by 2025.
Data by Statista revealed that by 2025, the estimated value of cyber insurance premiums would have increased to $20 billion worldwide, while the average cost of a data breach worldwide will be $3.86 million.
Statista stated that the organisations, which pay the ransom after a Ransomware attack, would be 51 per cent. According to the research platform, the estimate is based on a survey carried out in some countries that are most prone to cybercrimes.
As internet usage continues to increase, so does the amount of personal information and data made available online.
This could be out of choice, for example, somebody providing personal details to a social network in order to use their service. Or it could be unwillingly, as a victim of a cybercrime attack or data breach.
Not only has cybercrime become incredibly sophisticated in recent years, but in 2020 many people were online more than ever, working from home, relying on technology and digital services, and all of this amid the uncertainty and disruption of a global pandemic.
The risks to individuals, companies, organisations and governments have never been greater.
However, despite the fact that Nigeria is one of the countries subjected to cybercrimes, there is no operational insurance company that offers policies to protect organisations from information technology-related risks.
Experts said Nigerian industry players were not well-positioned to tap into the avenue as cyberattacks continue to target data, especially with the increase of tech start-ups and establishments in the nation.
Interestingly, Cyber insurance as a product line in insurance has been available for almost 25 years as packaged coverage. It is designed to cover all costs and expenses related to breaches when an organisation has been hacked or from theft and loss of client/employee information.
Currently, the cyber insurance market value is put at over $7.4 billion which is estimated to grow to $28 billion by 2026, according to Fitch.
It was revealed that Nigeria loses over ₦127 billion annually to cyber-fraud (about 10 per cent of our GDP) with cyber insurance covering none of the cost. Similarly, the Global Threat Impact Index 2017 listed Nigeria (and four other African countries) amongst the world’s highest-risk countries for cyber-attacks.
The Federal Government had its fair share of cybercrimes in 2011 when an anonymous Internet hacker group known as “NaijaCyberHacktivists” hacked the websites of the National Poverty Eradication Programme and the Niger Delta Development Commission.
The website of the Economic and Financial Crimes Commission was also attacked in 2013. In the Nigerian Electronic Fraud Forum Annual Report 2016, 19,531 fraud cases were documented in Nigerian banks, the traditional channels recorded the lowest number. It also indicated that N2.19 billion is lost to electronic payment fraud annually.
According to a cyber expert, Victory Oaikhena, cyber insurance essentially entails a contract between an insurer and an individual or company to protect against losses that are related to computer or network-based incidents.
“It is also an insurance policy that helps protect organisations from fallouts from cyber-attacks and hacking threats. Cyber insurance generally covers your business’s liability for a data breach involving sensitive customer information,” he said.
According to Oellrich, Cyber insurance (also referred to as e-business or network intrusion insurance) is a social scheme that is confronted with the task of protecting companies against losses resulting from failures in computer networks as a result of Data & Software theft and external hacking.
“First-and third-party risks Internal sabotage and theft, Computer malfunction, Web content liability, Viruses that impair or damage data, Network outages, Network congestion, Business interruption, Ebusiness extortion, Copyright infringement, Loss of reputation and other areas related to technology.
“Having a cyber insurance policy helps minimise business disruption during a cyber-incident and its aftermath, as well as potentially covering the financial cost of some elements of dealing with the attack and recovering from it.
“It can be an important risk management tool for strengthening information technology security and liability to Tech companies and Nigerian banks,” he explained.
He said the lack of growth in Nigeria can be attributed to either lack of understanding and awareness of the product or a lack of incentive for insurance providers to offer cyber insurance products for the Nigerian market.
“Also, it is not expressly provided for under the Insurance Act, 2004 but a close reading of the law does not expressly prohibit the creation of such policy. Section 2 (5) of the Act provides that an insurer “may be authorised to transact any new category of miscellaneous insurance business if he shows evidence of adequate reinsurance arrangement in respect of that category of insurance business and requisite capital where necessary and other conditions as may be required from time to time.”
Section 16 of the Act similarly provides a framework for the approval of a new product.
