As we have been writing over the past year, COVID-19 has presented a huge opportunity for hackers to wreak havoc on businesses and consumers. While confidentiality of data is usually the focus with such data breaches, system and data access is also at risk of attack by these same threat actors. We have seen this play out on a national scale the past couple of weeks with the pipeline shutdown due to ransomware.
According to the New York Department of Financial Services (“NYDFS”), insurance claims resulting from ransomware increased by 180% between 2018 and 2019, and almost doubled that amount in 2020. (Indeed, the pipeline company paid a ransom of $4.4 million.) As a result, the U.S. cyber insurance market was $3.15 billion in 2019 and is expected to exceed $20 billion in the next five years. And just recently, a carrier announced it would no longer pay out for ransomware claims in France. Earlier this year, in response to the increase in ransomware attacks, the NYDFS issued seven best practices (“Framework”) that insurers should adopt, including a recommendation that insurers should stop paying ransom payments. Insurers should be aware of what the Framework entails and what this means for them when implementing cybersecurity programs and trying to obtain insurance coverage in the future.