The persistent threat of ransomware continues to pose significant dangers to organizations worldwide. Recent news from around the world highlights the idea that combating this menace should involve banning ransomware payments to curb the growing threat. In light of these developments, the Marsh report, “Ransomware: A Persistent Challenge in Cyber Insurance Claims,” provides valuable insights and guidance for effectively understanding and managing these risks. Analysis of the 1,800+ cyber claims submitted to Marsh in the US and Canada in 2023 reveals crucial trends and strategies for mitigating cyber threats.
Key Points:
- 21% of clients with cyber policies reported an event in 2023, consistent with past years.
- Increased sophistication of cyberattacks, supply chain vulnerabilities, and privacy claims are major drivers of events.
- Top affected sectors: healthcare, communications, retail/wholesale, financial institutions, and education.
- Ransomware represents less than 20% of claims but remains a top concern.
- Proper claims management procedures and comprehensive cyber resilience strategies are crucial.
Detailed Findings:
The report underscores the growing significance of cyber risk and the necessity for effective risk transfer and management strategies. Marsh clients reported a record number of cyber claims in 2023, driven by more sophisticated attacks, supply chain vulnerabilities, and privacy claims.
Percentage of Clients Reporting Cyber Events:
The consistency in the percentage of clients reporting cyber events (16%-21% over five years) suggests that companies’ cyber controls keep pace with the increasing sophistication of attacks.
Industry Impact:
Healthcare, communications, retail/wholesale, financial institutions, and education are the top five sectors affected by cyber events, reflecting ongoing targeted attacks on these industries.
Breach Response Costs:
While the median cost of breach response expenses remained constant at around $160,000, the average cost increased due to a few large cyber events, highlighting the potential financial impact of significant breaches.
Ransomware:
Ransomware remains a central concern despite representing less than 20% of total claims. The frequency, sophistication, and severity of ransomware attacks are increasing, with median extortion payments rising dramatically in 2023.
Ransom Payment Considerations:
Organizations face complex decisions regarding ransom payments, balancing potential economic and reputational impacts. Factors such as privacy liability and business interruption costs play significant roles in these decisions.
Cyber Resilience Strategy:
The report stresses the importance of a holistic cyber resilience strategy, including regular evaluations, vendor security assessments, and effective cybersecurity controls. Investments in these areas can mitigate the impact of cyber events.
Using Panel Vendors:
Employing insurers’ pre-approved vendors can significantly reduce the time from event notification to coverage confirmation or first payment, improving overall claims management efficiency.
Conclusion:
As cyber risks evolve, continuous monitoring and adjustment of cybersecurity strategies are essential. Proper claims management, engaging with claims advocates, and maintaining comprehensive documentation are crucial steps in mitigating the impact of cyber events.
Read the Marsh report here.
Other News: Watch Out for “Long-Tail” Cyber Claims: WSJ (Opens in a new browser tab)