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How cyber insurance influences the ransomware payment decision: theory and evidence

Author

Listed:
  • Anna Cartwright

    (Oxford Brookes University)

  • Edward Cartwright

    (De Montfort University)

  • Jamie MacColl

    (Royal United Services Institute)

  • Gareth Mott

    (University of Kent)

  • Sarah Turner

    (University of Kent)

  • James Sullivan

    (Royal United Services Institute)

  • Jason R. C. Nurse

    (University of Kent)

Abstract

In this paper, we analyse how cyber insurance influences the cost–benefit decision-making process of a ransomware victim. Specifically, we ask whether organisations with cyber insurance are more likely to pay a ransom than non-insureds. We propose a game-theoretic framework with which to categorise and distinguish different channels through which insurance may influence victim decision making. This allows us to identify ways in which insurance may incentivise or disincentivise payment of the ransom. Our framework is informed by data from semi-structured interviews with 65 professionals with expertise in cyber insurance, cybersecurity and/or ransomware, as well as data from the U.K. Cyber Security Breaches Survey. We find that perceptions are divided on whether victims with insurance are more (or less) likely to pay a ransom. Our model can reconcile these views once we take into account context specifics, such as the severity of the attack as measured by business interruption and restoration and/or the exfiltration of sensitive data.

Suggested Citation

  • Anna Cartwright & Edward Cartwright & Jamie MacColl & Gareth Mott & Sarah Turner & James Sullivan & Jason R. C. Nurse, 2023. "How cyber insurance influences the ransomware payment decision: theory and evidence," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(2), pages 300-331, April.
    • Handle: RePEc:pal:gpprii:v:48:y:2023:i:2:d:10.1057_s41288-023-00288-8
    DOI: 10.1057/s41288-023-00288-8
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    References listed on IDEAS

    as
    1. Anna Cartwright & Edward Cartwright, 2019. "Ransomware and Reputation," Games, MDPI, vol. 10(2), pages 1-14, June.
    2. Toni Ahnert & Michael Brolley & David Cimon & Ryan Riordan, 2022. "Cyber Risk and Security Investment," Staff Working Papers 22-32, Bank of Canada.
    3. Jan Martin Lemnitzer, 2021. "Why cybersecurity insurance should be regulated and compulsory," Journal of Cyber Policy, Taylor & Francis Journals, vol. 6(2), pages 118-136, May.
    Full references (including those not matched with items on IDEAS)

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