Ransomware attacks can be disruptive, expensive, and even crippling to many businesses, and a comprehensive Cyber Risk Insurance (also called Data Breach, Privacy and Network Security insurance coverage) policy is a critical step, along with strong IT security, in protecting an organization.
Ransomware comes in various forms, but is typically a cyber attack that encrypts a victim’s data and then demands the payment of a ransom in return for the key to unencrypt the data. Payment is typically made via an untraceable cryptocurrency such as bitcoin. Attacks have shifted to specifically target certain vulnerable organizations, including SMBs, and can also involve multiple ransom payments.
Two examples demonstrate the impact a ransomware attack can have.
A ransomware attack disabled a Michigan utility’s accounting, email and communications systems, which were out of service until a $25,000 ransom payment was made via bitcoin (see here & here). The incident was the result of an employee unknowingly opening an email with an infected attachment. To complicate matters, a significant number of the utility’s IT employees left after the attack. The attack did not disrupt electric or water distribution, but the utility sustained approximately $2.4 million in business interruption and other costs from the attack. Loss costs included a cyber-emergency response team, crisis management and stabilizing and restoring its systems, and the cost of mitigation and enhanced cyber-security personnel and technologies.
A crippling attack on the Hollywood Presbyterian Medical Center early in 2016 was the first major ransomware attack on a major healthcare facility that did significant damage (here & here). The systems were not available for a number of weeks until a $17,000 extortion payment was made. And other significant attacks on healthcare entities followed (see here).
In addition to strong IT security, Cyber Risk Insurance is an important financial protection against hacking attacks. Coverages vary widely, but comprehensive Cyber Risk Insurance policy forms are available. Often, business interruption losses are the most expensive part of a ransomware claim. In order to protect against a ransomware attack, a comprehensive Cyber Risk Insurance policy must include coverage for extortion payments, business interruption, and data breach.
Tennant Risk Services is a specialty wholesale broker and underwriting manager, and delivers expertise, markets and exemplary services to our retail insurance agent clients in the placement of professional liability and specialty insurance (E&O, D&O, EPL, Cyber Risk, Specialty). Cyber Risk Insurance is our specialty, and we excel at hard to place accounts.