Large Indian information technology companies are seeking insurance cover to protect themselves against computer virus attacks and hacking.

In countries such as the United States and the United Kingdom, insurance cover against computer virus attack and hacking have become indispensable for IT companies and various financial institutions.

Dalip Verma, managing director, Tata AIG General Insurance Company, said, "Some IT companies and banks have approached us for cover on virus attack and hacking in the past 12 months. For reasons of confidentiality, we cannot divulge their names."

Verma pointed out that Tata AIG already has a 'netAdvantage Security Policy' which is a specialised insurance policy designed specifically for indemnifying an insured if his IT network has been attacked by a computer virus attack or has been hacked.

Arun Agarwal, CEO, Cholamandalam MS General Insurance, said, "Cholamandalam has indeed been working on insurance product for IT companies which would provide a cover against computer virus attack and hacking. There has been a demand from IT companies and banks for such a cover."

Agarwal did not disclose the finer details of the product being developed but pointed out that this insurance cover was difficult to develop as various parameters have to be take into consideration like how secure the internal security system of IT companies are against computer virus attack and computer hacking.

He said, "The insurance cover is expected to be launched in the next six months and would slowly be extended to banks and other financial institutions."

A senior official of United India Insurance said that the company has been working for the last four months on bringing out a product which would cover loss of data stored in computers due to virus attack and confidential information stolen by hacking.

IT companies at present have defensive mechanism to counter such incidences but have been asking general insurance companies for a insurance cover. The IT companies feel that if there is hacking of confidential information it will may lead to financial losses.

This product would at least take a year to hit the market, first data needs to be collected on number of virus attack and hacking such incidence which have happened in the last two years and to estimate by the number of man hours required to reconstruct of the data lost by computer virus attack.

Contrary to the above views, Antony Jacob, deputy managing director, Royal Sundaram Alliance Insurance Company, said, "We have not had enquiries for such cover from IT companies and so far requests for such a cover have not been received in India. Royal Sundaram would look to provide an insurance cover for computer virus attack and hacking based on market developments."

Jacob said, "This is a very specialist type of insurance best suited for large IT companies. Industry trends indicate that only a handful of companies in the world look to insurance as a means of protection against viruses."

"Specific coverage is provided by a very limited market overseas, but only after extensive investigation of the client's electronic systems, including security and controls," he added.

At present most of the insurance companies provide insurance cover called Electronic Equipment Insurance policy.

This policy gives a general cover for electronic equipment under which computers are covered for hardware breakdown. This scheme covers computers against loss of data and malfunction of components of computers due to hardware breakdown or malfunction of the system.

This insurance cover comes under the engineering portfolio and the various terms, conditions regarding premium are fixed by the tariff advisory committee. The premium charged on the EEI policy is one per cent of the sum insured.