U.S. energy companies are scrambling to buy more cyber insurance after this month’s attack on Colonial Pipeline disrupted the U.S. fuel supply, but they can expect to pay more as cyber insurers plan to hike rates following a slew of ransomware attacks.
The Colonial ransomware attack on May 7 shut the largest fuel pipeline network in the United States for several days, crippling fuel delivery to most of the U.S. East Coast. Pipeline companies rely on electronic networks, putting them at risk of additional attacks that could hamper delivery of crude oil or other fuels.
Insurers are preparing to increase cyber insurance premiums by 25% to 40% across many industries because of the number of claims, insurance companies and brokers have said. But energy companies should expect rate increases at the higher end of the spectrum as the Colonial attack exposed their vulnerabilities and exposed insurers to losses.
Only about half of the nation’s pipeline companies currently buy cyber insurance even though ransomware attacks have become more frequent, according to Nick Economidis, vice president of cyber liability at insurer Crum & Forster.