PerspectiveInsurance Companies Are Fueling Ransomware Attacks
Ransomware is proliferating across America, disabling computer systems of corporations, city governments, schools and police departments. the FBI and security researchers say paying ransoms contributes to the profitability and spread of cybercrime and in some cases may ultimately be funding terrorist regimes. But for insurers, it makes financial sense, industry insiders said. 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.
Ransomware is proliferating across America, disabling computer systems of corporations, city governments, schools and police departments. This month, attackers seeking millions of dollars encrypted the files of 22 Texas municipalities. Overlooked in the ransomware spree is the role of an industry that is both fueling and benefiting from it: insurance. In recent years, cyber insurance sold by domestic and foreign companies has grown into an estimated $7 billion to $8 billion-a-year market in the U.S. alone, according to Fred Eslami, an associate director at AM Best, a credit rating agency that focuses on the insurance industry. While insurers do not release information about ransom payments, ProPublica has found that they often accommodate attackers’ demands, even when alternatives such as saved backup files may be available.
Renee Dudley writes in Defense One that the FBI and security researchers say paying ransoms contributes to the profitability and spread of cybercrime and in some cases may ultimately be funding terrorist regimes. But for insurers, it makes financial sense, industry insiders said. 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.
“The onus isn’t on the insurance company to stop the criminal, that’s not their mission. 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?” said Loretta Worters, spokeswoman for the Insurance Information Institute, a nonprofit industry group based in New York. Attackers “see the deep pockets. You’ve got the insurance industry that’s going to pay out, this is great.”
