Ifrah Yousuf graphic of computer

Cyber-Insurance Rates Soaring Thanks to Rise in High-Cost Ransomware Attacks

Insurers have made “dramatic” increases in premiums for cyber-insurance and are considering lowering the ransom amounts they will pay.

Cyber-insurance rates are set to increase by as much as 25 percent thanks to insurance companies having to pay out expensive claims related to ransomware attacks, according to a Reuters report.

While ransomware attacks happened slightly less frequently in 2019 as compared to the year before, hackers are beginning to ask for higher payoffs and are doing more damage when they attack businesses or governments. Some cybersecurity experts have even gone so far as to blame insurance companies for exacerbating the problem, as many insurers would rather pay the ransom than deal with ongoing cybersecurity costs for their clients.

“The onus isn’t on the insurance company to stop the criminal, that’s not their mission,” Loretta Worters, a spokeswoman for the Insurance Information Institute, told ProPublica in August. “Their objective is to help you get back to business. But it does beg the question, when you pay out to these criminals, what happens in the future?”

Cyber-insurance premiums began to rise 5 percent to 25 percent late in 2019, Robert Parisi, the U.S. cyber product leader at Marsh & McLennan Companies, told Reuters. Policies often cover data recovery, legal liabilities and negotiators who can translate from hackers’ native languages, according to the report. Insurers have made “dramatic” increases but have not scaled back coverage, Parisi said.

Some insurers, like Sompo, are considering lowering the amounts they will pay for ransomware attacks against high-risk companies and require clients to pay 20 to 30 percent of ransomware claims, according to Reuters. Other insurance companies are thinking about making ransomware a separate product from general cyber-insurance coverage.

The high costs associated with ransomware attacks are also associated with the increasing amount of attacks on managed service providers responsible for the IT services of several companies, particularly hospitals and medical businesses. This means that one successful attack can encrypt sensitive data for dozens of facilities or companies at once, incentivizing the managed service provider to pay the ransom so that their clients can get access to crucial data as fast as possible.

In turn, malicious actors see that they can continue to raise ransoms and be rewarded by insurers and the desperate companies themselves.

While ransom payment can encourage attackers, it’s up to insurers to decide the cost-benefit analysis and make the right decision for all involved, according to Michael Lee, the city spokesman for Lake City, Florida, which was a ransomware attack victim in 2019.

“The insurer is the one who is going to get hit with most of this if it continues,” Lee told ProPublica. “It’s kind of hard to argue with them because they know the cost-benefit of [paying ransoms]. I have a hard time saying it’s the right decision, but maybe it makes sense with a certain perspective.”

Illustration courtesy of Ifrah Yousuf, via the Cybersecurity Visuals Challenge

About the Author

Haley Samsel is an Associate Content Editor for the Infrastructure Solutions Group at 1105 Media.

Featured

  • AI to Help Resolve Non-Emergency Calls Across Utah and Decrease 911 Caller Wait Times

    The Utah Communications Authority (UCA), which oversees the state’s next generation 911 technology services, recently announced that public safety answering points (PSAPs) throughout the state plan to implement Motorola Solutions’ Virtual Response technology to automate the receipt and resolution of 10-digit non-emergency line calls in Utah with the help of AI. Read Now

  • Report: 2025 Video Surveillance Market Set to Grow After Small Decline in 2024

    Novaira Insights has unveiled its latest report, “World Market for Video Surveillance Hardware and Software – 2025 Edition.” The research indicates that the global market for video surveillance hardware and software experienced a slight decline of 0.3% in 2024. This performance fell short of previous forecasts, primarily due to a significant decrease of 7.8% in the Chinese market. Conversely, the rest of the world saw a growth of 4.9%. The global market for video surveillance equipment was estimated to be worth $25.0 billion in 2024. Read Now

  • Report Reveals Local Governments Face Surge in Ransomware Attacks with Minimal Resources

    KnowBe4, the cybersecurity platform that comprehensively addresses human risk management, recently released new research highlighting the critical cybersecurity challenges facing state, local, tribal, and territorial (SLTT) governments. The report details how government organizations have become prime targets for cybercriminals while simultaneously facing severe resource constraints. Read Now

  • Video Surveillance Trends to Watch

    With more organizations adding newer capabilities to their surveillance systems, it’s always important to remember the “basics” of system configuration and deployment, as well as the topline benefits of continually emerging technologies like AI and the cloud. Read Now

  • New Report Reveals Top Trends Transforming Access Controller Technology

    Mercury Security, a provider in access control hardware and open platform solutions, has published its Trends in Access Controllers Report, based on a survey of over 450 security professionals across North America and Europe. The findings highlight the controller’s vital role in a physical access control system (PACS), where the device not only enforces access policies but also connects with readers to verify user credentials—ranging from ID badges to biometrics and mobile identities. With 72% of respondents identifying the controller as a critical or important factor in PACS design, the report underscores how the choice of controller platform has become a strategic decision for today’s security leaders. Read Now

New Products

  • Luma x20

    Luma x20

    Snap One has announced its popular Luma x20 family of surveillance products now offers even greater security and privacy for home and business owners across the globe by giving them full control over integrators’ system access to view live and recorded video. According to Snap One Product Manager Derek Webb, the new “customer handoff” feature provides enhanced user control after initial installation, allowing the owners to have total privacy while also making it easy to reinstate integrator access when maintenance or assistance is required. This new feature is now available to all Luma x20 users globally. “The Luma x20 family of surveillance solutions provides excellent image and audio capture, and with the new customer handoff feature, it now offers absolute privacy for camera feeds and recordings,” Webb said. “With notifications and integrator access controlled through the powerful OvrC remote system management platform, it’s easy for integrators to give their clients full control of their footage and then to get temporary access from the client for any troubleshooting needs.”

  • Connect ONE’s powerful cloud-hosted management platform provides the means to tailor lockdowns and emergency mass notifications throughout a facility – while simultaneously alerting occupants to hazards or next steps, like evacuation.

    Connect ONE®

    Connect ONE’s powerful cloud-hosted management platform provides the means to tailor lockdowns and emergency mass notifications throughout a facility – while simultaneously alerting occupants to hazards or next steps, like evacuation.

  • Unified VMS

    AxxonSoft introduces version 2.0 of the Axxon One VMS. The new release features integrations with various physical security systems, making Axxon One a unified VMS. Other enhancements include new AI video analytics and intelligent search functions, hardened cybersecurity, usability and performance improvements, and expanded cloud capabilities