The Extortion Economy: How Insurance Companies Are Fueling a Rise in Ransomware Attacks
Even when public agencies and companies hit by ransomware could recover their files on their own, insurers prefer to pay the ransom. Why? The attacks are good for business.
by Renee Dudley Aug. 27, 5 a.m. EDT
On June 24, the mayor and council of Lake City, Florida, gathered in an emergency session to decide how to resolve a ransomware attack that had locked the city’s computer files for the preceding fortnight. Following the Pledge of Allegiance, Mayor Stephen Witt led an invocation. “Our heavenly father,” Witt said, “we ask for your guidance today, that we do what’s best for our city and our community.”
Witt and the council members also sought guidance from City Manager Joseph Helfenberger. He recommended that the city allow its cyber insurer, Beazley, an underwriter at Lloyd’s of London, to pay the ransom of 42 bitcoin, then worth about $460,000. Lake City, which was covered for ransomware under its cyber-insurance policy, would only be responsible for a $10,000 deductible. In exchange for the ransom, the hacker would provide a key to unlock the files.
“If this process works, it would save the city substantially in both time and money,” Helfenberger told them.
Without asking questions or deliberating, the mayor and the council unanimously approved paying the ransom. The six-figure payment, one of several that U.S. cities have handed over to hackers in recent months to retrieve files, made national headlines.
https://www.propublica.org/article/the-extortion-economy-how-insurance-companies-are-fueling-a-rise-in-ransomware-attacks?utm_source=pocket-newtab
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On June 25, the day after the council meeting, the city said in a press release that while its backup recovery efforts “were initially successful, many systems were determined to be unrecoverable.” Lake City fronted the ransom amount to Coveware, which converted the money to bitcoin, paid the attackers and received a fee for its services. The Florida League of Cities reimbursed the city, Roberts said.
Lee acknowledged that paying ransoms spurs more ransomware attacks. But as cyber insurance becomes ubiquitous, he said, he trusts the industry’s judgment.
“The insurer is the one who is going to get hit with most of this if it continues,” he said. “And if they’re the ones deciding it’s still better to pay out, knowing that means they’re more likely to have to do it again — if they still find that it’s the financially correct decision — it’s kind of hard to argue with them because they know the cost-benefit of that. I have a hard time saying it’s the right decision, but maybe it makes sense with a certain perspective.”
= new reply since forum marked as read
and then they paid...................................
Time to go back to pen and paper...................
