In the face of that situation, affected companies may rush to reach out to their IT teams, police, crisis PR, lawyers and law enforcement. But, frequently, one of the first calls is to their insurance provider.
But this lifeline may also be getting harder to access for companies because of rising costs, more stringent requirements from insurers and increased scrutiny from the government when foreign hackers are involved.
“Data-intensive companies were the first … but over the last number of years all types of industries have started purchasing cyber insurance,” Tracie Grella, AIG’s global head of cyber insurance, told CNN Business. “I think at this point it’s certainly clear that all industries are impacted, all have to manage cyber risk.”
Depending on the size of the company and what needs to be covered — from security teams and lawyers to potential lawsuits and reimbursement for business losses or even ransom payments — plans can cost anywhere from “a couple hundred dollars … up to multimillion-dollar programs,” Grella said, adding that AIG’s clients make ransom payments roughly 50% of the time.
The FBI and cyber security experts recommend against paying ransoms, saying the payments encourage cyber criminals to step up their targeting of businesses and infrastructure.
The average cost of a cyber insurance policy in 2019 was $1,500 a year for $1 million in coverage with a $10,000 deductible, according to Mark Friedlander of the New York-based Insurance Information Institute.
It’s getting harder and more expensive
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