From Payer to Protector: the Evolving Role of Cyber Insurance in Ransomware Defense

Ransomware attacks have grown in frequency and sophistication, creating substantial financial and operational challenges for organizations. While technical defenses remain essential, they are often insufficient against evolving threats. This study investigates the factors (e.g., vulnerability, negotiation duration, damage amount, etc.) influencing the financial impact of ransomware incidents. It evaluates the evolving role of cyber insurance as both a risk mitigator and a proactive governance tool. Using a curated dataset of ransomware incidents from Advisen, we construct variables for preparedness, financial damage, and settlement length. We apply a logistic linear regression model to estimate their impact on total incident cost. Our findings show that preparedness—measured by the extent of insured exposure—is associated with significantly lower costs. At the same time, both financial damage and negotiation length are positively correlated with total losses. We further examine how pre- and post-incident services offered by cyber insurance-such as multi-factor authentication, endpoint detection, and recovery planning—enhance cyber resilience. The study contributes risk estimation that aligns cyber insurance services, offering practical guidance for firms, insurers, and policymakers. This research also advances theoretical understanding by positioning cyber insurance as a component of cybersecurity governance, bridging technical protection and financial resilience in the fight against ransomware risks.