Insurers cut cyber defence size in half
A pandemic-induced increase in extortion attacks and remote working has led insurers to halve the size of their cyber defences. Cybercriminals are increasingly launching ransomware attacks and even checking to see if potential victims have policies.
Due to high demand, major insurers in the European and U.S. markets, as well as syndicates operating within Lloyd's market, are able to charge higher premiums. These premiums are supposed to cover the cost of ransomware, repairs to hacked networks and losses due to business interruption. They are also supposed to cover the fees of PR specialists countering reputational damage. Nevertheless, cybercriminals are on the rise worldwide. They attack via ransomware that encrypts data, as well as using other sophisticated methods. What's more, attackers are checking if potential victims have policies, as this means a high chance of ransom payments. As a result, insurers are becoming especially vigilant and less willing to provide coverage for large sums.
According to official US figures, data ransomware payouts reached $590m in the first half of this year, compared with $416m for the whole of 2020. Anonymous sources report that Lloyd's, which owns 20 percent of the global cyber insurance market, is advising its more than 100 syndicates against accepting cyber business for another year. In August, U.S.-based AIG announced a reduction in cyberinsurance amounts. As a result, it will cost significantly more to obtain the same amount of insurance for businesses as the previous year.
As a result of the increasing number of ransomware attacks, the rates in the U.S. have doubled, while in the U.K. they have increased by 73 percent. For comparison, a few years ago the typical ransom amount was 600 dollars, and now it reaches even 50 million dollars. There are situations when insurers ask their clients to pay half of such ransom.
"Of course nobody wants to pay criminals," stresses Adrian Cox, CEO of Beazley. – "At the same time, however, if it was forbidden, many companies, whose systems were paralyzed, could not regain their ability to function."