Florida Cities Use Insurance to Pay Ransom to Hackers
The fact that two cities in Florida – Lake City and Riviera Beach – were hit recently by cyber ransomware attacks has put a new spotlight on the role of insurance in such attacks. In both cases, city officials decided to pay ransoms to hackers in order to regain control of their data and systems. Insurers covered the bulk of the ransom payments.
However, the role of insurance in such hacks is not clear. Baltimore City Solicitor Andre Davis has been directed to research coverage with an eye toward enhancing the city’s protection, after a debilitating ransomware attack in May cost the city an estimated $18 million. “I’m not being glib or snarky,” Davis said, “but insurance companies don’t like to pay. When you fight them hard enough, sometimes agreements can be reached. The whole issue of what’s excluded, what’s covered are very complicated legal issues that we are looking at very carefully.”
While some governments conclude that paying ransomware makes sense if insurance is involved, law enforcement officials disagree. The FBI issued a statement reiterating its long-standing view that victims should not pay, saying that doing so “encourages continued criminal activity, leads to other victimizations, and can be used to facilitate additional serious crimes.”