In recent years, the insurance industry has witnessed a surge in cyber insurance claims, shedding light on the losses suffered by uninsured companies. Ransomware, a significant concern, has become the leading type of claim, with extortion demands skyrocketing from an average of $15,000 to a staggering $175,000 over the past five years. This malicious tactic involves hackers infiltrating various software systems, holding sensitive data hostage, and demanding hefty ransoms for its release.
Escalating ransomware trends
The alarming escalation of ransomware attacks continues unabated. Notably, ransom demands breached the $1 million mark in 2018 and surged past $3 million in 2019. Publicly available data from 2020 indicated a staggering spike, surpassing the $30 million threshold. The evolving nature of these attacks has introduced a tactic known as “double extortion,” where threat actors not only encrypt data but also threaten to sell or auction it, intensifying the pressure on victims to pay.
Market Volatility and Cyber Insurance
The volatility in the cyber insurance market mirrors the unprecedented level of cyber threats. Underwriters in this sector face challenges due to the increasing frequency and severity of cyber attacks. Securing adequate coverage in this tumultuous market poses challenges for companies and agencies. Consulting with insurance agents becomes crucial to navigate the complexities and ascertain available market options for cyber coverage.
Navigating coverage challenges
Businesses, irrespective of size or industry, must evaluate their insurance policies for cyber coverage. Often, standard policies like business owner’s, commercial package, or general liability insurance might exclude cyber threats. Consequently, companies should consider adding cyber coverage separately through endorsements or standalone policies to mitigate risks adequately.
Seeking expert advice
Given the evolving landscape of cyber threats, seeking advice from insurers and agents becomes paramount. Assessing the appropriate coverage tailored to the specific risks faced by a business or agency requires insights from experts. Engaging with insurers and agents aids in identifying the most suitable cyber insurance solutions aligned with the unique needs and risk profiles of organizations.