Ransomware, cyberattacks could cause some insurance premiums to rise

© Image Provided by KMPH – Fresno-Visalia

Think ransomware and cyberattacks don’t affect you?

Think again.

Insurance companies are paying out more money in claims, and some of that could be passed onto other customers.

“Across the global marketplace you can expect about a 5 to 10% increase in that range if you have this coverage already associated with your policy and you’re renewing it,” says Jose Plascencia, Owner Principal at Allstate in Reedley.

While the FBI advises against paying out a ransom, cybersecurity experts say their clients sometimes have no other choice—especially if they’re dealing with perishable commodities.

“Who observes the brunt of it? It’s the insurance companies that pay out,” says Brian Horton, CEO of Breadcrumb Cybersecurity in Fresno.

AIG, one of the world’s largest insurers, saw a 150 percent increase in ransom and extortion claims between 2018 and 2020.

It adds that ransom demands now account for one in every five cyber insurance claims.

“The frequency of this crime is immeasurable right now,” says Plascencia says.

He says some business owners may not realize cybercrimes aren’t covered by general liability insurance.

“It’s not automatic,” he says. “There’s a lot of coverages that consumer business owners don’t know about that may greatly affect them.”

Among them: business property and employee dishonesty – should an employee steal product or information leading to a data breach.

Even so, “despite the risk, a lot of small business owners believe that the cost of the cyber liability policy does not outweigh the benefit,” Plascencia says.

Horton says it’s getting increasingly difficult for his clients to file a claim following a cybercrime.

Insurance companies want to see their clients had preventative measures in place.

“Five years ago, cyber liability used to be a few pages. Now, it’s a lot of information. There’s a lot of verification,” Horton says.

Breadcrumb Cybersecurity helps organizations protect their infrastructure, critical data, and reputation from today’s advanced cyber threats. Based in California, Breadcrumb offers comprehensive cybersecurity services for organizations throughout the U.S. Our services include regulatory compliance, risk assessments, digital forensics, penetration testing, incident response, technical/staff training, 24/7 security operations, and on-going advisory services.
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