56% of cyber insurance claims originate in the email inbox

56% of all 2023 claims were a result of funds transfer fraud (FTF) or business email compromise (BEC), highlighting the importance of email security as a critical aspect of cyber risk management, according to Coalition.

cyber claim increase

The 2024 Cyber Claims Report is based on reported claims data from January 1 to December 31, 2023.

“Threat actors want to get paid, and the email inbox has proven to be an easy place for an attacker to uncover payment information and potentially intervene in payment processes to steal funds,” said Robert Jones, Coalition’s Head of Global Claims.

Some boundary devices increase the likelihood of a cyber claim

The report also revealed an increased risk for organizations using boundary devices, such as firewalls and virtual private networks (VPNs). While these tools can help to reduce cyber risk, using some boundary devices can actually increase the likelihood of a cyber claim if they have known vulnerabilities.

For example, Coalition found businesses with internet-exposed Cisco ASA devices were nearly five times more likely to experience a claim in 2023, and businesses with internet-exposed Fortinet devices were twice as likely to experience a claim.

“We also found that policyholders using internet-exposed remote desktop protocol were 2.5 times more likely to experience a claim,” said Shelley Ma, Incident Response Lead at Coalition’s affiliate, Coalition Incident Response.

“With new AI tools making it even easier to execute targeted cyber attack campaigns and identify exploitable assets, having an active partner that can help protect your organization from digital risk is crucial,” concluded Ma.

This new insight comes following Coalition’s Security Labs researchers’ discovery of a 59% increase in unique IP addresses scanning for open remote desktop protocol throughout last year.

Drop in ransomware severity, frequency, and demands in 2H 2023

Overall claims frequency increased 13% year-over-year (YoY), and overall claims severity increased 10% YoY, resulting in an average loss of $100,000. Claims frequency increased across all revenue bands, with businesses between $25 million and $100 million in revenue seeing the sharpest spike (a 32% YoY increase).

As ransomware payments hit $1 billion globally, Coalition ransomware severity dropped by 54%. Ransomware severity, frequency, and demands all dropped in 2H 2023, though not enough to offset the surge in 1H. Ransomware frequency was up 15% YoY, and severity was up 28%, to an average loss of more than $263,000.

When policyholders found it reasonable and necessary to pay a ransom, Coalition helped policyholders negotiate demand amounts down by an average of 64%.

FTF frequency increased by 15% YoY, and severity increased by 24%, to an average loss of more than $278,000. BEC frequency increased by 5% YoY, and severity decreased by 15%.

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