In a rapidly evolving cyber landscape, businesses are shifting their approach from relying on insurance payouts to handling ransomware attacks internally. This change has led to a notable decrease in cyber insurance claims, even as more companies invest in such policies. The trend highlights an increasing reliance on internal capabilities and robust cybersecurity measures, which marks a significant departure from past practices where businesses often paid ransoms or quickly turned to their insurance policies for remediation.
A Shift Toward DIY Recovery
Recent findings from Databarracks’ Data Health Check survey, targeting 500 UK IT decision-makers, reveal a pronounced decline in the incidence of cyber insurance claims. Despite an increase in the number of organizations holding cyber insurance policies—from 51% in 2022 to 66% in 2024—the proportion of these organizations that actually made claims has dropped from 58% to a mere 36%. This data reflects a broader behavioral shift, emphasizing a movement towards do-it-yourself (DIY) recovery solutions where businesses recover from ransomware attacks using their own backups rather than paying ransoms or immediately resorting to insurance claims.
Rather than viewing cyber insurance as the first line of defense, many companies now prioritize internal recovery protocols. This marks a significant change from previous years when the immediate response to a ransomware attack often included paying the demanded ransom. By focusing on internal recovery, organizations significantly reduce their dependency on external financial support. Additionally, they retain more control over their data and operations, lessening the potential for further victimization from cybercriminals who may perceive ransom-paying organizations as easy targets.
Decline in Claim Amounts
As companies embrace internal recovery strategies, there’s also a noticeable impact on the financial scale of the claims being made. According to the survey, high-value claims, particularly those exceeding £1 million, have declined dramatically—from 48% in 2022 to just 16% in 2024. This reduction in claim amounts underscores the effectiveness of improved preparedness and the implementation of more robust recovery strategies.
Smaller claim amounts can be directly attributed to businesses’ investments in comprehensive cybersecurity and backup solutions. By fortifying their cyber defenses and crafting effective recovery plans, organizations are in a better position to mitigate the financial damages resulting from cyber incidents. This transformation does not only lessen the size of the claims but also enhances business continuity by preventing extended downtime and minimizing operational disruptions.
Market Dynamics and Rising Preparedness
James Watts, MD of Databarracks, attributes these shifting dynamics to changes in the cyber insurance market. In earlier times, the relative ease of securing insurance payouts may have inadvertently encouraged businesses to pay ransoms, thus perpetuating the cycle of ransomware attacks. However, rising insurance costs and the introduction of stricter coverage requirements are now compelling organizations to adopt more robust preparedness measures.
Insurers are increasingly demanding higher standards from businesses before providing coverage, including maintaining air-gapped, encrypted backups and having tested recovery plans in place. This push for better preparedness has driven companies to enhance their cybersecurity frameworks, ensuring they are better equipped to handle attacks independently. This evolution fosters a culture of resilience where organizations are no longer overly reliant on insurance payouts, thereby reducing the overall volume of claims.
Enhanced Business Resilience
The heightened preparedness required by stricter insurance policies has had an encouraging effect on business resilience. Insurers are posing more detailed questions about an organization’s cybersecurity measures, prompting businesses to adopt comprehensive backup and recovery plans. As a result, organizations that align with these stringent standards enjoy not only enhanced protection but also greater confidence in their ability to address cyber threats effectively.
By investing in strong security frameworks, businesses improve their capability to swiftly recover from attacks, minimizing both operational disruptions and financial losses. This level of preparedness not only protects proprietary data but also safeguards the organizations’ reputations, which can suffer significantly in the wake of successful cyber breaches. The industry’s shift towards resiliency suggests a more robust defense mechanism against cyber threats, substantially reducing the likelihood of repeated attacks.
The Downside of Ransom Payments
Despite the seeming simplicity of ransom payments, this approach has proven unreliable. James Watts notes that paying a ransom does not guarantee data recovery and, more critically, marks the organization as a future target. This creates a repetitive cycle of vulnerability and ongoing attacks as cybercriminals exploit the apparent readiness of such organizations to pay up.
Conversely, organizations concentrating on independent recovery can avoid the pitfalls associated with ransom payments. These businesses are better prepared to combat attacks, ensuring faster, more cost-effective recoveries with minimal operational disruption. The avoidance of ransom payments also diminishes their attractiveness to cybercriminals, potentially lowering the incidence of target attacks.
Industry-Wide Positive Shift
In today’s rapidly evolving cyber environment, companies are increasingly shifting their strategies for dealing with ransomware attacks. Instead of depending on insurance payouts, many businesses are now focusing on managing these attacks internally. This shift has led to a significant decrease in the number of cyber insurance claims, even though more companies are investing in these policies. This trend underscores a growing reliance on in-house capabilities and strong cybersecurity measures, signaling a notable change from previous practices. In the past, businesses would often pay the ransom or immediately turn to their insurance policies to manage the situation. However, the evolving cyber landscape has compelled organizations to prioritize enhancing their own cybersecurity infrastructure. Investments in advanced security technologies, employee training programs, and comprehensive incident response plans are becoming the new norm. This proactive approach not only aims to minimize the damage caused by potential cyber threats but also reflects a broader strategy to maintain control over sensitive data and operational continuity without solely relying on third-party assistance.
