Cyber insurance was supposed to offer peace of mind. But for many organizations, it’s starting to raise some tough questions. One of the biggest: are you more appealing to cybercriminals because you’re insured?
Why Hackers Are Digging Into Insurance Policies
Recent research shows that once a cybercriminal gets into your system, one of the first things they do is look for any documents related to your cyber insurance. If they find out you’re covered, they’re much more likely to demand a bigger payout.
Tom Meurs, a Dutch law enforcement official who studied hundreds of ransomware incidents for his Ph.D., noticed that ransom demands often skyrocket when hackers discover a policy. The average demand can climb nearly three times higher. If sensitive data is also stolen, that number jumps even more.
What Happens When Hackers Know You’re Insured
According to Meurs, companies with cyber insurance end up paying significantly more than those without it. Insured businesses are more likely to fork over hundreds of thousands of dollars. Uninsured businesses, on the other hand, tend to negotiate lower payouts or walk away without paying anything at all.
Certain industries also seem to be targeted more aggressively. For example, technology companies often fall victim because their services touch so many others. A single breach can ripple across multiple businesses.
Why Paying Ransom Doesn’t Pay Off
Even if you have coverage, paying a ransom often backfires. Law enforcement and security experts strongly recommend against it. Here’s why:
There’s No Promise of a Fix
Sending payment doesn’t guarantee that your data will be restored or that a decryption key will work properly. Some files stay locked, others get corrupted, and some are never recovered.
You Might Be Violating Your Policy
Many insurance policies come with strict rules about how to handle incidents. Communicating with attackers or revealing policy details can void your coverage. Also, if the attacker is on a sanctions list, paying them could result in serious legal trouble.
Government advisories have highlighted this, including guidance from FinCEN and OFAC urging businesses to think twice before engaging with ransomware groups.
It Slows Down Real Recovery
Paying up might seem like the fastest way to get back online, but it’s often not the most effective. Recovery tools from criminals are unreliable at best. You’ll have a much smoother time if you’ve already invested in strong backups and a tested incident response plan.
It Might Raise Your Future Costs
Even if your insurer covers the ransom, that doesn’t mean you’re off the hook. A full policy payout could affect your premiums down the line, and not always in your favor.
Protecting Yourself Before Trouble Starts
Cyber insurance is helpful, but it shouldn’t be your only defense. The best approach is to prepare well before something goes wrong. That means training your team to recognize threats, regularly reviewing your security posture, and keeping reliable backups of your data.
The more proactive you are, the harder it is for attackers to succeed. And the less likely you are to become one of those companies paying the price, literally.
