The recent spike in ransomware attacks and other forms of cybercrime continues to damage cyber insurance companies.
As a result, the insurance industry is left with no choice but to have stricter rules and requirements while pushing up the cost of coverage as more companies start needing insurance.
Ransomware Attacks in 2021
As cybercriminals take over a company's database system, they demand a certain amount of payment to gain back control.
In the first half of 2021, the U.S. has seen ransomware attacks happen almost every week. Its frequency and severity both increased, as cybercriminals are now also targeting large companies in exchange for hefty sums of money.
According to the Washington Post, ransom payments from companies increased by 341%, totaling $412 million in 2020.
John Kerns, managing director at Beecher Carlson, an insurance brokerage, stated that this is probably the tipping point of 2021. He added that throughout his 32 years of experience in the insurance industry, this is the first time that he has witnessed a market quite like what we are facing right now.
Cybercrime Insurance Industry's Struggle
The recent ransomware attacks continue to push insurance carriers to reevaluate the reasonable amount and coverage they can afford to offer their clients.
They also have to identify the reasonable amount they should charge per client to adapt to the rapidly increasing cybercrimes.
Because of the attacks, underwriters now demand to see detailed proof of their clients' cybersecurity measures -- in ways that they have never witnessed in the past.
For example, clients who are not using multifactor authentication could result in an insurance rejection.
The Washington Post also mentioned that most insurance companies also started to restrict how much coverage they can give their clients. They also limited their terms and conditions. Certain instances even require slashing the total amount of reimbursement to be used specifically during ransomware attacks.
Attacking Companies with Insurance
James Turgal, former FBI agent now Vice President of Optiv, stated that some cybercriminals specifically attack companies with insurance coverage.
Turgal added these ransomware attacks happen because cybercriminals are going after "endless pot of money." These are in the form of insurance companies.
He has also worked on cases where cybercriminals even show their victims a screenshot of their cyber insurance's website. They are saying that there is no need to worry because the insurance company will pay, not the victim.
Recent Ransomware Attacks
Multiple ransomware attacks happened in the last few months, affecting many aspects of the economy.
Meat plants temporarily stopped operations, Vermont chemotherapy treatments were canceled, and fuel companies were attacked. The Colonial Pipeline ransomware attack set a panic on the East Coast that resulted in a fuel shortage.
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Written by Fran Sanders