Ransomware Exclusion in Cyber Insurance: A Wake-Up Call for Agencies
Ransomware attacks continue to pose a significant threat to organizations worldwide. A recent report by Veeam has unveiled a concerning trend: ransomware exclusions in cyber insurance policies.
The Alarming Rise of Ransomware:
According to the report, one in seven organizations will experience a ransomware attack, with over 80% of their critical data at stake. These attacks can be catastrophic, potentially leading to severe financial and reputational damage.
Paying the Ransom is a Risky Proposition:
Despite having a “Do-Not-Pay” policy on ransomware, the report reveals that 80% of surveyed organizations resorted to paying the ransom to retrieve their data. However, the success rate was disappointingly low, with only 59% of those who paid managing to recover their data. This raises crucial questions: Can agencies and small businesses afford the financial burden of paying ransom demands? What if paying doesn’t guarantee data recovery?
Cyber Insurance Policy Shifts:
The report highlights a troubling development – an increasing number of cyber insurance policies explicitly exclude ransomware coverage. Of the organizations surveyed, 21% stated that ransomware is now specifically excluded from their policies. This shift leaves businesses vulnerable to financial losses resulting from ransom payments, data recovery expenses, and potential legal ramifications.
Insurance Implications:
The report reveals that 74% of organizations with cyber insurance experienced increased premiums during policy renewals. Additionally, 43% faced higher deductibles, and 10% witnessed reduced coverage benefits. These financial implications can be substantial and potentially crippling.
The Need for Robust Data Protection Strategies:
With ransomware exclusions becoming more prevalent in cyber insurance policies, small businesses must focus on implementing robust data protection strategies. The report emphasizes the importance of immutable clouds and disks, which ensure that backup data remains unalterable and resistant to tampering by cybercriminals. By safeguarding backups, small businesses can reduce the likelihood of falling victim to ransomware attacks and minimize the impact if an attack does occur.
Questions to consider:
- How would your agency or small business cope financially if faced with a ransomware attack and excluded from insurance coverage?
- Are you confident in the current effectiveness of your data protection strategies to prevent and recover from ransomware attacks?
- Have you considered the potential reputational damage and loss of customer trust resulting from a ransomware incident?
The Veeam report serves as yet another wake-up call, highlighting the growing exclusion of ransomware from cyber insurance policies. The implications are clear. Small businesses need to evaluate their cybersecurity posture, implement preventive measures, and ensure their data backups are secure. By doing so, they can navigate the changing insurance landscape with confidence, safeguard their valuable assets, and mitigate the devastating impact of ransomware attacks.
Motiva specializes in working with small businesses to make them more productive and profitable, while keeping their data and business protected. To see what we can do for you, go to www.motiva.net/insurance to schedule a quick discovery call.
Walter Contreras
Walter Contreras has over 25 years of experience in information technology, including cybersecurity, with a focus on the Insurance Industry. As both a computer scientist and a graduate of the Columbia University Business School’s Executive MBA program, Walter understands how the world’s digital transformation is impacting small and medium businesses. His mission is to deploy information technology to protect and empower entrepreneurs.
