Cyber Insurance Said To Be Fueling Ransomware Attacks

By on September 17, 2019

September 17, 2019

An article from ProPublica makes the case that the economics of the insurance business is resulting in decisions that effectively fuel ransomware attacks, and there is evidence that ransomware hackers are specifically targeting companies that do have cyber insurance, something that could in some cases be gleaned from SEC filings. Citing “industry insiders,” the ProPublica article says that settling by paying the ransom makes financial sense for the carriers because it “holds down claim costs by avoiding expenses such as covering lost revenue from snarled services and ongoing fees for consultants aiding in data recovery. And, by rewarding hackers, it encourages more ransomware attacks, which in turn frighten more businesses and government agencies into buying policies.” For whatever reason, cyber insurance is a rapidly growing industry niche at the same time other and more traditional areas are shrinking or are expected to. Auto insurance is an example, according to one insurance industry veteran, who says the expectation is that self-driving cars will result in fewer accidents and a corresponding reduction in auto insurance premiums.

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