In today’s digital world, more businesses are turning to cyber insurance to protect against the rising costs of ransomware, data breaches, and system outages. But what many don’t realize is that this safety net could also make them more appealing to cybercriminals.
New research indicates that when threat actors discover a company has cyber insurance, they often increase their ransom demands significantly. Let’s explore why this happens, what it means for your business, and how you can better protect your organization.
The Link Between Cyber Insurance and Higher Ransom Demands
Cybercriminals are becoming more calculated in how they target businesses. One of the first things they look for after breaking into a system is any sign of a cyber insurance policy. According to research by Dutch police investigator Tom Meurs, ransomware attackers are significantly more aggressive when they find evidence of coverage.
His analysis of 454 ransomware incidents between 2019 and 2021 revealed:
- Ransom demands were up to 2.8 times higher for companies with cyber insurance
- If attackers also stole data, the demand could increase by as much as 5.5 times
- Insured companies ended up paying $800,000 on average 44% of the time
- Non-insured companies typically paid $150,000, and only 24% of them paid at all
Cyber insurance has inadvertently become a signal of vulnerability, and high-paying sectors like tech services (ICT) are especially at risk due to the broader impact they have across multiple clients.
The Dangers of Engaging with Ransomware Criminals
Some threat actors use the presence of insurance to justify their extortion. They’ll argue that if you’re covered, you have nothing to lose by paying. However, this line of thinking is both dangerous and wrong.
Here’s why cybersecurity professionals and law enforcement strongly advise against paying the ransom:
- There’s no guarantee your data will be restored
Attackers might never send the decryption key, or the tool might not work correctly. You could still lose critical files or face system corruption. - You might violate the terms of your policy
Some insurance contracts prohibit negotiating or paying ransoms. If you unknowingly pay a sanctioned entity, you could also face legal consequences. - Paying encourages more attacks
Giving in funds to the attacker’s operation increases the chances of them targeting you, or others, again in the future. - It doesn’t ensure quick recovery
Even if you get your files back, decryption can be slow and incomplete. You’re often better off restoring from secure, verified backups. - It may affect future premiums
Insurers may raise your rates after a payout or reduce your coverage options, particularly if you suffered a full policy loss.
What Business Owners Should Do Instead
Cyber insurance is a smart part of any risk management strategy, but it shouldn’t be your first or only line of defense. Prevention and preparation are still your best tools for minimizing exposure.
Here are some steps to protect your business:
- Limit who can access your cyber policy details
Store documents securely and educate staff on the importance of confidentiality. - Train your team to spot phishing and social engineering
Human error remains the biggest risk factor. Regular training helps reduce that risk. - Maintain strong, versioned backups
Keep them disconnected from your network so attackers can’t encrypt them. - Build and test an incident response plan
Know how your team will respond to a breach. Practice scenarios regularly. - Work with a trusted cybersecurity partner
A managed IT services provider can help monitor threats and maintain compliance with your cyber insurance requirements.
Cyber Insurance Should Support, Not Replace, Your Security Strategy
The right cyber insurance policy can save your business from financial ruin, but it can also make you a more tempting target if not handled properly. Treat your policy like sensitive data. Focus on proactive security measures to reduce your risk and avoid needing to use your insurance in the first place.
FAQs About Cyber Insurance and Ransomware Threats
1. Can cyber insurance actually increase my risk of attack?
Yes. If attackers find out you’re insured, they may assume you have the resources to pay and increase their ransom demands.
2. Should I avoid getting cyber insurance altogether?
Not at all. Cyber insurance is an important safety net, but it should be paired with strong security measures and careful handling of policy details.
3. What’s the most important step to reduce ransomware risk?
Train your team, use strong backups, and partner with IT professionals who can help you stay ahead of evolving threats.
Contact CTTS today for IT support and managed services in Austin, TX. Let us handle your IT so you can focus on growing your business. Visit CTTSonline.com or call us at (512) 388-5559 to get started!