We Can Thank Ransomware For Our Insurance Dilemma

Long Beach NY

16 August, 2021

7:33 AM

Description

How often have you seen or heard an advertisement about the online risks to computer accounts, records and files? Cyber risks are growing and an end is not in sight. These risks are among the largest threats facing businesses, personal accounts and insurers. Hackers write about 6,000 new viruses to infect and worm into computer systems each month. The viruses target a wide selection of operating systems. Avoiding virus and malware breaches have emerged as a top security priority for businesses around the world. Maybe computing this online threat into dollars will better explain the destruction of cybercrime. The collective costs and lost revenues for companies affected by cyberattacks, according to a research report, could reach as much as $5.2 trillion during the coming three years. Separately, the data and analytics company GlobalData has reported that gross written premiums for the cyber insurance market are projected to reach $20.6 billion by 2025. These costs eventually filter down to the consumer. While the rest of us were focused on the pandemic, a series of significant cyber incidents and ransomware attacks affected a number of platforms. Among the infected were the shopping platform Magento and Texas-based SolarWinds, a company that develops software for businesses to manage networks, systems and information technology infrastructure. The attack on SolarWinds impacted up to 18,000 companies, including multiple U.S. government agencies. The estimated current cost for cyber insurers is $90 million. The attacks and loses are increasing coverage rates at alarming rates, between 20 and 50 percent, in the cyber insurance sector. No Longer Optional Cyber insurance once was considered an optional investment for companies with minimal sensitive data. Today, however, with cybercrime impacting all industries and market segments, a strong defense against cyber threats no longer is an option. Companies and organizations across all industry segments and of all sizes must allocate assets to manage the risk. The effect of this crime on the insurance market has increased the already high ceiling for individual losses, enlarged the potential for risk accumulation and allocated significant capital resources. As cybercrime repeatedly adjusts to firewalls, the insurance market also adjusts, particularly for ransomware losses. Premiums are increasing, doubling in some cases. Fewer insurers now are writing these policies; those that do are not willing to accept too much of the risk. Ransomware Rules Ransomware is the major reason that organizations and businesses no longer consider cyber insurance coverage an option. Ransomware is a broad-based threat. No one is safe from its damage. Hackers are demanding high ransoms to remove their viruses. The hackers often set the ransom based on the victim’s level of cyber insurance coverage. This has forced some insurers to adjust policies that forbid reimbursement coverage for ransomware extortion payments. The variations of cyberattacks, corporate policies and the insurance industry’s attempt to cover these attacks are moving faster than you scrolled through this article. While the average person blinks about 20 times a minute under normal circumstances, people only blink about seven times a minute when reading an article such as this one on a computer. It takes just one blink, however, for a virus to destroy your business. Contact us at The Hastava-Whitmore Agency -- (516) 431-3833 -- if you wish to discuss the parameters of cyber insurance coverage.