Ciaran Martin, former head of the UK’s National Cyber Security Centre, is the latest security expert to champion the cause for making it illegal for cyber insurers to reimburse ransom payments. Quoted in a recent Guardian article, Martin claims that cyber insurers are “inadvertently funding cyber crime”. Like many similar articles quoting seasoned security professionals there is an underlying allegation that this move would not be supported by the insurance industry. That somehow it would fundamentally destroy the value proposition of the product and service we provide, and that we would rather that this crime continue to develop “because it’s good for business”.
I can’t claim to speak on behalf of the insurance industry, but having been involved in cyber insurance for almost 20 years now, I can say with some certainty that this is not how the industry thinks. In fact, I’d make a fairly large wager that most (if not all) of my peers would happily support a bill to make the reimbursement of ransoms illegal, if (and only if) that would actually solve the problem. Unfortunately, I don’t think it would.
Let’s leave aside for one minute the practicality of enacting – and enforcing – such a law, it feels that targeting insurers as the source of the problem is fundamentally mis-guided. Less than 15% of global businesses purchase this kind of insurance, so to suggest that eliminating part of it would fix what is now a global issue would be to ignore the other 85% of businesses who face the same problem without insurance.
There is no evidence to suggest that businesses who purchase cyber insurance are more inclined to pay a ransom demand than those without, in fact in my experience, it is quite the opposite. Armed with insurance a company can avail itself of the appropriate experts to guide them through the issue and support them through the recovery process, in the absence of this, most small businesses assume they have no other option but to pay.
Furthermore, to suggest that there are no laws in place already to prevent payments is fundamentally wrong. The US government has rightly reminded the industry of global sanctions laws, which make it illegal to facilitate payments to entities on the OFAC SDN list (and foreign equivalents). We are steadily seeing more entities related to cyber crime being added to these lists, and with insurers being regulated entities and most having US assets, this is already a powerful incentive to seek alternatives to paying ransoms.
There is no doubt that ransomware poses a serious threat to global business. Increasingly emboldened criminals are ditching their old tactics of ID theft and social engineering and moving to the increasingly lucrative business of extortion. Furthermore, the economic damage caused by ransomware is often many multiples of the billions the criminals are stealing, making this the worst form of financial crime. It is a problem that needs to be stopped.
But there are many reasons why this crime continues to develop:
- Cryptocurrencies make it possible to launder billions of dollars with little fear of being caught. More must be done to clamp down on the exchanges that wittingly or unwittingly facilitate this crime.
- The media continues to demonise businesses that fall victim to this crime, making them fear the accompanying negative publicity which in turn fuels the desire to pay rather than be “outed”. We must recognise that this is a crime and the only party that ought to be shamed is the perpetrator.
- Recent tough privacy regulations should also be questioned. Their accompanying fines and potential route for statutory damages are making it even more lucrative for criminals to steal. Businesses now fear the financial consequences of the data being leaked, making this one of the most common tactics in the evolving crime of extortion. We must stop seeking to punish the victims and instead focus on preventing the crime.
- Cyber insurance has a critical role to play in tackling ransomware. There are already close connections between the industry and global law enforcement, with threat intelligence being shared and data being gathered. By following carefully structured paths and involving the right professionals we can ensure that payments are only made when absolutely necessary and that law enforcement are kept informed so they can use the intelligence gathered to track and ultimately catch the perpetrators.
Our goal is to provide the support and resources necessary to help businesses recover as quickly as possible, and to ultimately help protect our clients from this increasingly serious source of crime. As an industry we are committed to doing all we can to ultimately eradicate this vile bi-product of the digital age. And with almost $1tr in policy limits exposed I don’t think there is any other part of the economy that has a stronger motivation to make it happen!
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