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December 14, 2021updated 26 Jan 2022 5:12pm

Cyber insurers cut their ties to ransomware crime payments as cover losses escalate

By GlobalData Financial

Insurers are losing appetite for cyber insurance as ransomware cover losses and payments have become problematic, which is leaving business underinsured in this area. COVID-19 has presented a new era of opportunities for cybercriminals, as the pandemic forced businesses around the globe to digitise and adopt remote-working practices overnight.

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Cyberattacks continue to rise every year and no sector seems to be immune. Hackers target sensitive information such as organizational, client, and financial data, as well as intellectual property (IP) and proprietary functions. As digital transformation becomes a top priority for many organizations, traditional perimeter-based security models are no longer sufficient to address the growing cybersecurity concerns. Against the backdrop, enterprises explore zero trust as it takes a micro-level approach to authenticate and approve access at every point within a network. Reasons to read: The cybersecurity landscape is swiftly changing, and businesses need more awareness to meet the evolving change. The report highlights the current state of play and the future potential of the zero trust approach in cybersecurity to protect critical digital infrastructure of enterprises across sectors such as financial services, healthcare, telecom, and transportation, among others. Read our report and gather insights on the following topics:
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by GlobalData
Enter your details here to receive your free Whitepaper.

The cyber insurance market is at the mercy of the COVID-19 pandemic. According to GlobalData’s 2021 UK SME Insurance Survey, just under a third (31.5%) of UK SMEs have cyber insurance in place. Cyber insurance was ripe to grow as an increasing number of businesses have made a permanent shift towards more flexible working practices and hybrid work models. Yet the increasing risks faced by cyber insurers means that instead of looking to secure new business, insurers are thinking twice.

Generally, the start of the pandemic has marked a new period for cyber insurers, who have managed ballooning ransomware claims by reducing coverage limits and capacity, while an increase in demand has also led to higher premium payments. More recently, Lloyd’s of London, one of the world’s leading underwriters of cyber insurance, is disengaging itself from this market, having discouraged its 100-odd syndicate members from taking cyber business in the new year. This closely follows the steps of AXA, which in mid-2021 stopped writing new business paying from ransomware attacks in France, becoming the first major insurer to discontinue this type of cover.

Indeed, the increase in cybersecurity risks is not only being felt by insurers but also by businesses. Further data from our survey indicates that 30.7% of SMEs felt the cyber risks faced by their business had increased to some extent since the start of the pandemic. This sentiment worsened as the size of the businesses increased, rising to 42.1% among medium-sized SMEs.

ransomware payments

Source: GlobalData’s 2021 UK SME Insurance Survey

 

Note: Micro: have between zero and nine employees. Sole traders are a subset of micro businesses and have zero employees. Small: between 10 and 49 employees. Medium: between 50 and 249 employees.

The growing sophistication of cybercriminals puts insurers in a very difficult position. A ransomware attack uses malware to encrypt a user’s or an organisation’s information, so that a victim cannot access information such as files and databases until a ransom is paid. The most advanced hackers can check whether prospective victims have policies in place that are likely to cover ransomware attacks. Meanwhile, limited IT support when working from home, installing fewer software security updates, and using unprotected home networks and personal laptops have all contributed to an increase in cybercrime.

Free Whitepaper
img

Never Trust, Always Verify: Is Zero Trust the Next Big Thing in Cybersecurity?

Cyberattacks continue to rise every year and no sector seems to be immune. Hackers target sensitive information such as organizational, client, and financial data, as well as intellectual property (IP) and proprietary functions. As digital transformation becomes a top priority for many organizations, traditional perimeter-based security models are no longer sufficient to address the growing cybersecurity concerns. Against the backdrop, enterprises explore zero trust as it takes a micro-level approach to authenticate and approve access at every point within a network. Reasons to read: The cybersecurity landscape is swiftly changing, and businesses need more awareness to meet the evolving change. The report highlights the current state of play and the future potential of the zero trust approach in cybersecurity to protect critical digital infrastructure of enterprises across sectors such as financial services, healthcare, telecom, and transportation, among others. Read our report and gather insights on the following topics:
  • Traditional vs zero trust protection
  • Key advantages and solution providers
  • Major industries and key players
  • Drivers and challenges
  • Top funded startups and Mergers & Acquisitions
  • Implementation challenges
by GlobalData
Enter your details here to receive your free Whitepaper.

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