Ransomware attacks are on the rise, which is causing ransomware insurance costs to increase substantially. Want those files back? It’s going to cost you more than it used to thanks to bitcoin.
It may seem counterintuitive that ransoms would rise as bitcoin does, but that’s because most digital extortionists are not adjusting their demands as the price of bitcoin changes. For example, one criminal may demand two bitcoins per month for your files back. Those two bitcoins per month will persist even if the value of a bitcoin jumps a thousand-fold. As such, ransomware insurers are losing massive amounts of money due to the recent dramatic increase in the value of bitcoin.
Kimberly Horn, an executive at insurer Beazley Plc who oversees breach-response and information-security claims, spoke with the Insurance Journal about this issue, saying that ransomware claims at Beazley have risen more than 70% over the last year.
The rise of bitcoin is directly responsible for the rise in ransomware insurance claims, and that’s not good for anyone. Chubb Ltd., best known for catering to wealthy families and corporations, is one among several insurers that are facing a severe jump in costs tied to claims from ransomware attacks. Michael Tanenbaum, an executive vice president at Chubb addressed the changes that the company observed over the last year. According to Tanenbaum, top payouts in corporate ransomware attacks began to exceed $1 million around midyear—substantially more than the previous maximum of $17,000.
How will all of this turn out? Time will tell. One thing is sure, insurers are going to have to adapt to this new world of cryptocurrency. The current model is simply not sustainable if cryptocurrencies continue to fluctuate as much as bitcoin has during 2017.