Ransomware coinsurance
A mechanism under which the insured retains a percentage of any ransomware loss, introduced widely in 2021 to keep its interest in prevention and in not paying.
Ransomware coinsurance requires the insured to bear a fraction, typically between ten and fifty percent, of any loss caused by a ransomware attack, above the deductible. It applies to every item hit by the attack, restoration, business interruption, extortion, not just the ransom. The word here designates a participation by the insured, not the sharing of a risk among several insurers that it covers in its classic sense. The mechanism became widespread in 2021, when ransomware frequency and severity made the line unprofitable. It seeks three effects. Reducing the insurer's exposure to the most volatile peril without excluding it. Keeping the insured economically interested in prevention, since it will pay part of the bill. And limiting the incentive to pay the ransom, by preventing the insured from deciding with someone else's money. Coinsurance is often modulated according to the controls in place, removed or reduced for an insured that demonstrates isolated backups and widespread multi-factor authentication, which makes it a pricing tool as much as a limitation.
Textbook case: a cyber policy provides a 50,000 euro deductible and 30 percent ransomware coinsurance. A 1.05 million euro loss caused by ransomware results in an indemnity of 700,000 euros: 1,000,000 euros after the deductible, of which the insurer takes 70 percent.
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