Companies Use Kidnap Policies To Recoup WannaCry Losses

With cyber insurance expensive and not used by many outside of the U.S., companies are turning to their insurance policies that cover things like ransom and extortion to get back losses from the WannaCry ransomware attack that caused headaches around the globe a little over a week ago.

According to a report in Reuters, citing insurance, companies are using their kidnap and ransom insurance for ransomware attacks like the WannaCry attack at a higher rate, but the payouts from those policies could be lower than if the companies had cyber insurance.

“There will be some creative forensic lawyers who will be looking at policies,” said Patrick Gage, chief underwriting officer at CNA Hardy, a specialist commercial insurer in London, in an interview with Reuters. He noted that kidnap and ransom polices are geared toward threats against lives and that companies would be better offer purchasing specific coverage rather than a more general insurance policy.

Meanwhile, American International Group, Hiscox and the Travelers Companies told Reuters they all have been receiving ransomware claims from some customers that have kidnapping and ransom policies, as ransomware attacks become more common, the companies said.

“We are seeing claims (over the past 18 months) but not a huge uptick,” a Hiscox spokeswoman said. “These are within expectations and entirely manageable.” The spokeswoman wouldn’t say if the insurers received any claims specifically from WannaCry.

The move on the part of the companies to use their K&R policies to cover ransomware attacks comes in amid a sharp increase in those type of viruses. Reuters, citing Symantec, reported more than 460,000 ransomware attempts in 2016, up 36 percent from 2015. The average payment demand increased from $294 to $1,077, marking a 266 percent increase.

As has been widely reported, a massive attack hit everything from the United Kingdom’s National Health Service, European automakers and Chinese firms and any number of companies across other verticals.