Global cyber reinsurance rates have soared by up to 40% in the July renewal season, reinsurance broker Willis Re said on Thursday, as ransomware attacks increase in number and severity.
A ransomware attack on Colonial Pipeline in May shut the largest fuel pipeline network in the United States for several days, crippling fuel delivery to most of the U.S. East Coast.
The average ransom payment made by a business to restore data after a cyber attack was $220,000 in the first quarter, up 43% from the last quarter of 2020, according to cyber security firm Coveware.
In addition to the ransom payments, cyber insurance and reinsurance policies can cover the cost of restoring the network, business interruption losses and even the hiring of a PR agency to address reputational damage.
“Reinsurers that have been writing cyber are looking at considerably worse results than a few years ago,” said James Vickers, chair of reinsurance broker Willis Re International.
“I don’t think people had really imagined the extent of the ransomware attacks going on.”
Reinsurers insure the insurers, and a rise in reinsurance rates feeds through into higher insurance costs.
Businesses worldwide are fighting sophisticated data scientists as they battle to protect their data-rich computers from cyber crime – and the costly attacks are not going to stop, a top expert at insurer Sompo Holdings Inc. told the Reuters Future of Insurance USA conference last week.
Insurers and reinsurers are cutting the amount of cyber coverage they provide after being hit with large claims, industry sources say.
Vickers said some countries such as France were debating whether cyber insurers should be making ransomware payments.
“Those discussions are beginning to happen,” he said.
FBI Director Chris Wray last week pleaded with public companies and other hacking victims to avoid paying ransom, saying he feared it would only embolden cyber criminals to ramp up future attacks.
Property reinsurance rates have also risen by as much as 30% in Florida at July renewals, Willis Re said, as the hurricane season gets under way.