Ransomware & the Insurance Industry – How to Protect Yourself and Your Policyholders

The ransomware problem is reaching crisis levels, and no industry is immune. Insurers need to take steps now to protect themselves and their policyholders.

The Surge in Attacks and Ransom Demands

In 2020, we saw a 715% increase in ransomware attacks, according to Cyber Florida at the University of South Florida. The ransom demand amounts also seemed to increase. So far, 2021 hasn’t offered any relief. Colonial Pipeline paid a $5 million ransom, according to Wired, and JBS paid $11 million, according to Reuters.

Now hackers have asked for $70 million in an attack against Kaseya, according to PBS. Kaseya is a Miami-based software company that uses software to provide third-party IT service to up to one million other companies. Even though the PBS report states that only about 800 to 1,500 of these companies may have been compromised by the ransomware attack, it’s still a massive attack.

Insurers Are Feeling the Impact

For insurers, the rise in ransomware can hit in two ways. First, cyber insurers are being pushed to limit as more and more claims are filed, and for larger and larger amounts. Insurance Journal reports that AXA, a global insurance company, has stopped writing cyber coverage that includes reimbursement for ransom payments in France, and other insurers are likely to follow suit.

Second, insurers are also vulnerable to attacks. Hackers often target companies with large amounts of personal or financial data, and insurers have that in spades. According to Bloomberg, CNA Financial Corp. paid $40 million after a ransomware attack locked the insurance company out of its own network.

Prompt Payment May Be Making the Situation Worse

As the ransomware crisis worsens, many people are pointing out that the willingness to pay hackers encourages more attacks while funding criminal activities. The FBI has discouraged ransomware payments, and in October 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) warned that ransomware payments could violate OFAC regulations.

Nevertheless, companies keep paying, mostly because they feel like they have no other choice. More and more, ransomware hackers aren’t simply encrypting files. They’re also threatening to release them. This means that ransomware victims are very eager to end the attack, even if they have backups.

At the same time, giving into a ransomware demand doesn’t guarantee the safe return of the files. We are dealing with criminals, after all. Even worse, ZDNet says that 80% of companies that pay a ransom face a second attack, and it often appears to come from the same hackers.

Prevention Is the Only Solution

Once a company is hit by a ransomware attack, there are no good options. Whether or not the company pays, the damage has been done.

Prevention is the only good solution. All companies must make sure that their systems are as secure as possible, and this is especially true for insurance companies and other companies that possess valuable personal and financial data.

We’ve explained before why your hosting choices matter. Now the stakes are becoming even higher. This is not the time to try to reinvent the security wheel in house. Instead, it’s important to rely on the full security force of tried-and-true systems. This is why we recommend hosting with MS Azure.

The security stance of your core system partner also matters. On this front, I’m proud to report that we have successfully completed our 2021 System and Organizational Controls (SOC) 2® Type 1 examination. The audit, conducted by 360 Advanced, affirms that Insuresoft’s practices, policies, procedures, and operations meet the SOC 2 standards for security, availability, processing integrity & confidentiality.

This is a clear indication of Insuresoft’s commitment to the security and integrity of our platform. Insuresoft views itself as a caretaker of our customer data, and as security concerns grow, that’s why many insurers are choosing Insuresoft as their core platform and engine of growth.

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