Is personal insurance worth it to protect against online fraud?

People should consider personal insurance to protect against online fraud, experts say.

They warn that an increase in fake emails, bogus calls and duplicate text messages aimed at tricking people into giving up personal information, stealing their money and even their identities justifies such measures.

Etisalat from the United Arab Emirates is the latest company to offer personal cybercrime insurance to protect against online banking fraud, credit card fraud, internet purchase loss, cyber extortion and identity theft.

Cybercrime is a broad term, encompassing everything from financial theft to data breaches. The rise of remote work and rapid digital transformation due to the Covid-19 pandemic has led to a rise in cybercrime around the world, according to experts.

“Demand for insurance against cyber threats has increased over the past five years,” said Vitaliy Trifonov, creative technical director at cybersecurity firm Group-IB.

“As the number of cyber threats increases, many people will choose not to devote their time to protecting themselves, creating a growing need for simpler and more accessible solutions. This is exactly where personal insurance will play a crucial role.

“While it may not become as ubiquitous as auto insurance, it is possible that certain types of financial transactions or services will eventually require proof of cybercrime insurance to mitigate risk for both customers and financial institutions.”

Increase in threats to the public

In the United Arab Emirates, 64 percent of businesses suffered at least one ransomware attack in the past year, according to a report by US-based cybersecurity firm Proofpoint.

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Ransomware attacks steal files and demand money to release them. Also this year, the UAE’s telecoms and digital government regulator warned the public about cybercriminals sending messages that appear to be from reputable courier companies.

The scammers then trick unsuspecting people into handing over money. A 2021 study by British technology website Comparitech estimates that UAE residents lose US$746 million annually to cybercrime.

The number of cyber threats to individuals will continue to increase in the coming years, another expert said.

“I anticipate an increase in personal cybersecurity incidents targeting an individual’s identity and financial condition,” said Morey Haber, chief security officer at cyber firm BeyondTrust.

“These attacks are most likely carried out using social engineering such as email, text messages and phone calls, or malware in rogue applications that compromise a user’s assets and maliciously influence social media or directly conduct financial theft through banking or online purchases.”

Mr Haber said cryptocurrency users are at increased risk of these attacks and it is not clear whether or not cyber insurance would cover attacks on digital wallets unless they are provided by a regulated bank.

He said US-based NortonLifeLock is an example of how companies can offer insurance against cyber theft. This model provides the ability to monitor your personal identity, internet usage, and banking activity, and to locate possible threats.

“But a few [companies] willing to cover personal losses,” he said. “This alone creates a market that Etisalat is poised to serve, potentially fueled by the frequency of cybercrime targeting mobile devices for exploitation.”

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Personal insurance policies offered by Etisalat start at Dh63 for a single device, which covers a potential $5,000 payout if funds are stolen.

Mr. Haber said personal cyber insurance policies are likely to pay out for losses related to notional online banking fees, credit card theft, as well as online purchases using payment services like PayPal or Venmo.

“End users should consider purchasing a personal cyber insurance policy or personal identity threat monitoring service that offers coverage if they are concerned about electronic identity theft, which can have a financial impact,” said Mr. Haber.

Who benefits from cybercrime insurance?

Mr. Haber said those who could benefit from such insurance are people who travel frequently and use foreign cellphone providers and Wi-Fi networks that could be compromised; those with multiple credit cards and financial investments that are not monitored weekly; Individuals who use credit cards to purchase online goods locally or from overseas locations; and those who own real estate at home or abroad who could be victims of title deed theft.

However, it’s not just about paying off the insurance and then relaxing. Mr Trifonov warned people to remain vigilant as people often fail to take proper security measures or voluntarily send money to manipulative scammers.

“The policy may not pay out if the insured person fails to follow reasonable safety practices or if the loss was caused by the intentional actions of the policyholder,” he said.

“This can reduce the attractiveness of this type of insurance.”

Updated April 09, 2023 10:15 am