As businesses become more reliant on computer technology, insurance companies have begun offering “cyberattack insurance” in an attempt to provide protection from hackers.
Marketplace.org reports that the rise of digital ransomware attacks against companies in recent years has lead to a lucrative new business avenue for insurance companies — cyberattack insurance. Due to the effectiveness of recent ransomware attacks, such as the WannaCry virus, which managed to shut down the British National Health Service and infected up to 200,000 computer systems in 150 countries in a single weekend, companies have begun to research methods by which they can protect themselves if they fall prey to these malicious hacks.
Smita Bhargava, vice president of programs and special risk for the insurance company Clements, told Market Watch, “Basically, cyber liability is a form of an insurance policy that has been created specifically for cyber events, which can range from hacking to data breach. It could be somebody like an employee can steal data from your computer or hardware or it can range up to hacking and other events.” Bhargava continued to discuss the most recent ransomware attacks saying, “It is interesting, what happened with the last two, the big ones, is that is wasn’t just a cyber liability policy that could have responded. It was more of a kidnap and ransom policy, which has a cyber extortion extension, that could have paid for such expenses.”
According to the Insurance Information Institute, an insurance trade group, ransom demands and security hacking cost companies approximately $1.5 billion in 2016. Due to the effectiveness of these new cyberattacks, there’s very little that victims can do to fight back as the virus freezes all computer functions until a ransom is paid via Bitcoin, a cryptocurrency that is extremely hard to trace. This is now a threat that insurance companies can help with, “people think it’s kidnap and ransom, so they rule it out, but these types of policies also have cyber extensions,” explained Bhargava.
Due to the growing reliance on the internet and computers by companies in the modern world, freezing a company’s computer systems can be extremely damaging. Bob Parisi, a cyber product leader for insurance broker Marsh, told Reuters, “If your CFO gets kidnapped, the company is going to continue to function. If you get a piece of malware in the system, you might have two factories that stop working. The actual damage is probably greater.”