Around ten days ago, MGM Resorts International was cyber-attacked, shutting down slot machines and internal computer systems. According to a gaming industry analyst, MGM Resorts was losing over $8 million in revenue daily.
Caesars Entertainment was also hit by the same ransomware attack two weeks ago. The casino operator paid the ransom, but MGM did not.
Caesars announced that an insurance provider would cover the cost asked by the attackers. MGM Resorts may make the same announcement. Unfortunately, this could mean paying higher insurance premiums in the future.
Ransomware attacks have gone up since 2019. While casinos have been the main targets, even bigger companies such as Google have been cyberattacked. This has led to increased insurance rates for clients.
According to Guy Carpenter, insurance companies have increased prices by 183 percent since 2020. It is believed that one of Caesars’ insurance carriers paid between $15 million and $30 million to Scattered Spider, the group that hacked the operator’s system.
One analyst recently noted that MGM had about a $200 million cyber insurance policy. This amount could be used to pay ransomware and the damages associated with it. Moreover, analysts predict that insurance companies will increase cyber insurance costs in the coming months.
Industry’s Reaction to Cyber Attacks
The cyber attacks on MGM and Caesars have led to various reactions. Usually, companies spend billions of dollars on cybersecurity annually.
This is called proactive. However, most companies react after a cyber attack, case, and point Caesars and MGM attacks. Following these attacks, more gaming operators have contacted cybersecurity firms to take preventative measures.
Similarly, insurance companies are reacting by increasing rates of cyber attacks. According to Guy Carpenter, ransomware activity has increased since the beginning of this year. The other time these attacks escalated that much was in the fourth quarter of 2021.
With the recent attacks on the Las Vegas casinos, the industry could heighten its attention to ransomware groups. The money that will be paid to attackers will also encourage a more cautious method of pricing the premiums.
Scattered Spider attacked both MGM and Caesars. The group used the social engineering method to hit both the casino operators. However, the insurance industry will not classify both breaches collectively but distinctively.
The Price Increase Is Predictable
Raising cyber insurance rates will not come as a surprise. This is because insurance companies raise rates following negative occurrences.
If you have ever been involved in an automotive accident, you realize that your insurance provider raised your rate. So, if insurance companies would raise their rates on casino operators, it would not be surprising.
Some companies may refuse to sell new policies. For instance, State Farm recently stopped selling policies to homeowners in California due to wildfire risk. Meanwhile, insurance providers in Florida have continually increased their prices due to hurricanes.
Insurance companies may not end policies for cyber attacks. However, the recent attacks may serve as a reason for them to increase their rates.
Meanwhile, Guy Morris believes it is time to look at cyber attacks differently. He noted that the cybersecurity industry confronted the issue through policy wording and quantification. However, he suggested it was time to look at it as a financially motivated crime.
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