Ransomware attacks continue to increase the cyber reinsurance fees. In July, the rates have skyrocketed to a 40% surge due to ransomware attacks.
WOODBINE, MD - MAY 13: In an aerial view, fuel holding tanks are seen at Colonial Pipeline's Dorsey Junction Station on May 13, 2021 in Woodbine, Maryland. The Colonial Pipeline has returned to operations following a cyberattack that disrupted gas supply for the eastern U.S. for days.
According to Reuters, a reinsurance broker, Willis Re, attributes the ballooning insurance fees to the growing effects of ransomware attacks as it has become ubiquitous and more damaging.
Ransomware Attack Increasing Cyber Reinsurance Fees
Recent major ransomware incidents, such as the Colonial Pipeline and the JBS cyberattack have drastically changed insurance and reinsurance companies.
A ransomware attack crippled Colonial's operation, which led to gas shortages and price increase. It has even forced President Joe Biden to declare a state of emergency on May 10, 2021. The extent of the attack has been significant as the pipeline carries 45% of the fuel supply on the East Coast, which in total is 2.5 million barrels in a single day.
Furthermore, the pipeline had to pay $5 million to restore its system.
Meanwhile, JBS, a major meat company, likewise faced the wrath of hackers due to a ransomware breach. As such, food supply, farmers, and restaurants have been affected by the massive mess.
The company forcibly paid the offenders a whopping $11 million to restore its operation.
Ransomware Attacks and Cyber Reinsurance Prices
Chair of Willis Re Internation, James Vickers, said that 2021 turned out to be the worst year for cyber reinsurers. He even implied that people have no idea about the actual "extent of the ransomware attacks."
In hindsight, a cyber reinsurance policy has expansive coverage, ranging from ransom payments, business losses from interruption, and even network restoration costs.
Not to mention that the attack's damage to the company's branding will also need some mitigation by using the services of a reputable PR company. The reinsurance policy will answer that as well.
So, all of that factors into the increasing insurance fees.
Additionally, to keep up with the changing times, insurers and reinsurers forcibly have to limit their coverages to stay in business.
Read Also: Hacking Epidemic: Over Seven Ransomware Attacks Per Hour - America's Biggest Security Threat
Cyber Insurance Helps Ransomware Attacks
Meanwhile, ZDNet reported that a study suggested that cyber insurance does more harm than good to cybersecurity.
The research paper said cyber insurance is indirectly helping hackers to grow as they pay for the ransom of the victims.
Given that the insurance company shoulders the ransom payment, companies will opt to choose that route instead. Although doing so is not illegal in the United States, authorities advise against it as payments will contribute to another large-scale attack.
Related Article: Cryptocurrency Rise Enables Ransomware Attacks to Increase, FireEye CEO Claims
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Written by Teejay Boris
