Ransomware attacks , which encrypt a computer's files and demand a ransom to decrypt them, have seen a dramatic increase during the pandemic . The average ransom payment rose from $41,000 in the third quarter of 2019 to $234,000 in 2020, according to security firm Coveware .
Now Coalition, a cybersecurity startup ,has seen a surge in demand for its services. This fall, it reached $100 million in annual premium revenue, up from $50 million a year ago.
The rise in ransomware attacks has experts worried. “We saw a $100 million ransom note just last week,” says Coalition CEO Joshua Motta. Last month, a hacker allegedly stole medical records from a Finnish psychotherapy center, then contacted mental health patients and demanded money from them individually. In September, a ransomware attack on a German hospital led to the death of a patient.
Coalition provides cybersecurity for a total of 27,000 small and medium-sized businesses, including churches, farms, country clubs, venture capital firms and a popular hot sauce company. The policies it provides cover incidents ranging from ransomware attacks to a company’s online overdraft. To cover $1 million in potential losses, Coalition charges premiums of $1,500 to $3,000 annually. In May, the 150-employee company raised $90 million at a $900 million valuation.
Motta, 37, founded Coalition in March 2017. Before Coalition, he worked at organizations including the CIA, Goldman Sachs , and Cloudflare, a $20 billion web infrastructure and security company.
In the U.S. cyber insurance market, the biggest players are companies like AIG, Chubb and Axa XL. Coalition is trying to differentiate itself from them by using more technology, Motta says.
Coalition is also using technology to reduce service to some customers. The startup refuses to provide cybersecurity to independent IT companies because Motta believes the risks are too high. If an IT company is hit by a cyberattack, all of its customers are often at risk.
