A cyberattack shuts down a factory, delaying deliveries and triggering contractual penalties. A system hack leaves hundreds of trucks stranded, disrupting its supply chain. An employee uploads confidential client contracts to a public AI tool, exposing sensitive information. This Cyber Awareness Month, Tata AIG General Insurance is urging businesses to check how prepared they are.
Tata AIG General Insurance is urging Indian corporates to strengthen their cyber insurance coverage as cyber threats, AI-led risks, and regulatory scrutiny continue to rise. The insurer said organisations now need to treat cyber risk as a core business exposure, on par with financial risks and natural catastrophes.
Businesses are becoming increasingly aware of their responsibilities under India’s Digital Personal Data Protection (DPDP) framework and evolving global privacy regulations. This is especially true for sectors such as banking, insurance, and healthcare, where companies handle large volumes of sensitive customer data and face growing concerns around cyber preparedness and liability exposure.
“AI risk today is at the turning point that cyber risk reached a decade ago. Cyber cover began as part of technology professional indemnity policies and grew into a category of its own. AI is moving the same way,” said Najm Bilgrami, National Head – Liability Lines, Tata AIG General Insurance. “Businesses should not assume that AI-related losses are automatically covered under the policies they already hold. They should map the exposure and ask their insurer or broker exactly where they stand.”
On one side emergence of Artificial intelligence (AI) has given attackers better and more sophisticated tools whereas on the Technology companies front Underwriters are expecting next waves of Professional Indemnity Claims would come due to extensive use of AI in different processes and technologies. When it comes to D&O Liability, we already started witnessing issues like AI Washing, Failed AI investment, AI discrimination etc.
Tata AIG is building AI-specific risk assessment into its existing covers as customers increase their use of AI. Over time, the industry expects dedicated AI policies to emerge. These are likely to cover legal defence costs, third-party liability claims, regulatory investigations and business interruption linked to AI failures and other first party costs.
On the other front, according to Bilgrami, regulatory activism has become a major driver of D&O claims. More than 30% of incidents reported under Tata AIG’s D&O portfolio are now linked to regulatory actions, compared to nearly 13% five to seven years ago.
The company also pointed out that India’s liability insurance landscape is undergoing significant transformation due to evolving regulatory and compliance requirements, increasing complexity of commercial contracts and contractual liabilities, greater scrutiny of ESG disclosures and greenwashing, emerging risks around AI adoption and governance, escalating cyber threats and data privacy concerns, growing dependence on third-party service providers and supply chains, heightened shareholder activism and management accountability, and the increasing complexity of cross-border litigation and liability exposures.
