Amid a rise in cyberattacks targeting banks and other businesses, insurance claims have also surged, particularly in the first half of the year. Industry experts estimate that claims have crossed ₹150 crore, driven by a spate of data breaches and ransomware attacks. However, premiums in the segment remain under pressure due to increased reinsurance capacity.
The claims ratio for cyber insurance in the banking sector has risen by 50-60 per cent over the past year, industry experts said. Cyber insurance claims from banks, which stood at ₹25-75 crore five years ago, have now crossed ₹150 crore. The overall cyber insurance market, meanwhile, is estimated to have collected premiums of ₹900-1,100 crore in FY26.
Banks and financial institutions have doubled their cybersecurity insurance cover over the past five years, with the sum insured rising to $50-100 million in 2025-26 (FY26) from $10-25 million in 2020-21, according to insurance industry experts. Rising cyberattacks, higher claim severity and tighter regulatory scrutiny have prompted lenders to seek greater protection against digital risks.
The increase comes amid a rise in cyber incidents and claim severity, prompting lenders to reassess their insurance requirements annually and, in some cases, even during the policy period. Stricter regulatory reporting requirements have also pushed financial institutions to strengthen their cover. The upcoming implementation of the Digital Personal Data Protection (DPDP) Act is further prompting organisations to reassess their exposure to cyber risks and opt for higher coverage.
“Cyber insurance claims have been on a sustained upward trajectory over the past few years, with recent incidents underscoring the expanding cyber exposure across sectors, with BFSI emerging as one of the most affected. The sector has witnessed claims upwards of Rs 150-175 crore, nearly 50 per cent higher than last year,” said Shikha Hasani, senior vice-president, Unilight Insurance Brokers.
However, she said this rise should not be viewed solely through the lens of increasing cyberattacks, adding that it also reflects a structural shift in how organisations identify, report and respond to cyber incidents. Greater awareness of cyber risk, tighter regulatory reporting requirements and the gradual strengthening of cyber-resilience frameworks are bringing previously unreported or under-reported incidents into the claims pipeline, according to Hasani.
“Despite the rise in claims, premiums remain under pressure due to increased insurer and reinsurer capacity, including foreign players entering the Indian market. Currently, a cover of around Rs 800 crore can attract premiums of upwards of Rs 2-2.5 crore, depending on the risk profile. However, sustained claims could eventually force insurers to raise premiums, reduce capacity or temporarily withdraw from certain segments. Organisations must therefore complement insurance with robust cybersecurity measures,” she added.
The evolving DPDP regime is further adding to the urgency for organisations to strengthen their cyber risk management frameworks.
During the year, several banks, including State Bank of India, Central Bank of India, Bank of Baroda and AU Small Finance Bank, witnessed cyber incidents, resulting in losses for insurers in the BFSI segment. Insurers and other financial institutions have also faced a spate of cyberattacks in recent years. According to industry experts, the segment did not witness major incidents last year, but attacks have increased this year, triggering a rise in claims.
Evaa Saiwal, business head – liability and cyber insurance at Policybazaar for Business, said, “The Indian cyber insurance market has witnessed a sharp deterioration in claims experience, with claim frequency and severity rising significantly in the second half of 2026. The increase in claims has been driven largely by ransomware attacks and data breaches, rather than business interruption losses. Forensic costs alone can exceed Rs 50 lakh per affected company. Meanwhile, premiums remain under pressure despite rising losses, owing to large reinsurance capacity. However, rising claims could eventually lead to premium corrections as insurers reassess risks.”
