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What is cyber insurance and can it protect scam victims?

Even if you have a cyber insurance policy, it does not mean you do not have to take precautions against being scammed, an expert says.

What is cyber insurance and can it protect scam victims?

A woman sending a text message on a mobile phone. (File photo: iStock)

SINGAPORE: Scam attempts are on the rise, and millions have been lost through cyber threats including phishing attacks and fake friend call scams.

Insurance can help to recover monetary losses for some victims, but existing policies only cover certain types of scams.

And even if you are covered by insurance, it does not mean you do not have to take precautions against being scammed, an expert said.

“Insurance is recommended only after sufficient precautionary measures are implemented, (for example), installing and updating cybersecurity software, learning about cyber risk,” said Dr Shinichi Kamiya, deputy director of the Nanyang Technological University’s (NTU) Insurance Risk and Finance Research Centre.

Such measures substantially reduce vulnerability, said Dr Kamiya, who is also an associate professor in insurance and actuarial science.

Discussions about scam insurance surfaced after some malware victims lost their Central Provident Fund (CPF) savings in June.

At a parliament sitting in July, Minister for Manpower Tan See Leng suggested that the government was considering using insurance to protect against such losses.

However, his ministry later clarified that the CPF Board has no plans to consider the use of insurance schemes in this context.

WHAT DO CYBER INSURANCE PLANS COVER?

Personal insurance against scams and cyber threats is still relatively new in Singapore, said Dr Kamiya of NTU.

At least three companies – StarHub, FWD Singapore and Etiqa Insurance Singapore – offer cyber insurance for individuals.

But none of these policies would cover the recent malware scam where more than S$120,000 (US$88,000) of CPF savings were lost.

StarHub said its CyberCover policy can be used if the fraudulent transaction was made on the insured person’s payment card. But as the scam involved unauthorised bank account transactions, victims would not be covered by the policy.

The policy has a S$750 limit for claims related to online shopping and unauthorised transactions. Policyholders also have to pay a deductible of S$50 or 10 per cent per claim, whichever is higher.

Underwritten by Chubb Insurance Singapore, the policy costs S$10.08 a month for individuals or S$13.11 a month for families.

FWD said it wants to cover the most common cyber scams in Singapore, so its policy only covers online shopping fraud and fraudulent electronic transfers.

For example, if an online purchase was made but the product not delivered, even after multiple attempts to contact the merchant, the policyholder can make a claim.

Only FWD customers who purchase the company's home insurance product can sign up for its cyber insurance plan. Coverage of up to S$5,000 is complimentary for these customers.

Etiqa’s cyber insurance covers phishing, where scammers pose as a legitimate person or company in order to obtain sensitive information. The policy covers claims for stolen funds from phishing attacks, unauthorised transactions because of mobile wallet fraud and more.

The policy, which has an annual premium of S$108, covers up to S$25,000 per year for cyber fraud, cyber extortion, restoration costs and identity theft. 

IS CYBER INSURANCE RECOMMENDED?

Personal cyber coverage will likely become more important as more activities and transactions are conducted online, said NTU’s Dr Kamiya.

Those who value peace of mind and want to guard against financial and reputational losses caused by cyber threats may find such policies worthwhile, he said.

“However, it's important to carefully evaluate the coverage, policy terms and pricing before making a decision,” he added.

One notable exclusion to FWD and Etiqa’s coverage are confidence scams where an individual feigns romantic interest.

Etiqa notes that in such cases, the victim’s actions are “performed out of one’s own will”.

Victims who can receive a refund or reimbursement from a bank will also not be able to make insurance claims.

Source: CNA/an(cy)
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