Cyber Insurance helps – only when done right

When the history of modern cyber risk is written, the fall of KNP Logistics will stand out as a tragedy that should have been impossible. A company that survived world wars, recessions, labour crises, supply-chain disruptions, fuel shortages, and the rise of globalized logistics was ultimately destroyed by something far more trivial – a weak password.

In June 2025, the 158-year-old UK transport group, collapsed into insolvency after a devastating ransomware attack. It was not just a disruption or a difficult quarter. It was an extinction event: the business shut down, 700 employees were out of work, and operations that had served generations of clients evaporated almost overnight.

But the most interesting fact is that KNP had cyber insurance. But the policy never paid.

A single weak link

According to investigators and senior executives at the UK’s National Cyber Security Centre (NCSC), the Akira ransomware gang gained entry into KNP’s systems by simply guessing an employee’s password. There was no complex espionage, no zero-day vulnerability, no Hollywood-style hacking sequence. It was the oldest trick in the cybercriminal book: find one careless user, and the entire digital castle collapses.

Once inside, the attackers encrypted every critical system the company relied on, routing, billing, payroll, inventory, scheduling, customer databases. The entire logistics chain went dark. Trucks stood idle. Orders froze. Communication stopped. The business was paralysed.

The hackers demanded a ransom that experts estimated at nearly £5 million. KNP could not afford it, but even more importantly, even paying would not have guaranteed recovery. The organisation had ceased to function.

Why KNP’s Cyber Insurance did NOT pay

Most cyber insurance contracts require insured companies to follow baseline security hygiene: strong passwords, multi-factor authentication (MFA), regular security updates, and evidence of secure configurations. When the breach was traced back to a guessed password, it fell into the category of “failure to maintain required controls.”

In simpler terms: the company’s own lapse invalidated the claim.

The Indian situation

India is now one of the world’s fastest-growing digital economies. But with that comes unprecedented vulnerability. Here is the reality:

• India is the world’s second most targeted country for cyberattacks (CloudSEK ThreatLandscape Report 2024).
• 71% Indian firms faced phishing and deepfake attempts (Global Ransomware Survey 2025 by OpenText).
• Average ransom demand in India is estimated to be ₹4–5 crore.
• Average recovery cost after an attack is around ₹12–14 crore.

Some high-profile Indian incidents include:

• The AIIMS Delhi breach of 2022 that compromised 1.3 TB of sensitive patient data
• The Tata Power cyberattack of 2023 impacting critical infrastructure
• Unauthorized access at HDFC Bank and Axis Bank through compromised vendors (2024)
• The ransomware attack that grounded SpiceJet flights in 2022

Yet surprisingly, a survey by Ken Research indicates only 25% of Indian SMEs understand the importance of cyber insurance (it is estimated that only 2% SMEs actually have cyber insurance), despite being the most vulnerable segment. And among those insured, a significant percentage of claims are disputed or denied due to inadequate cyber hygiene.

Cyber Insurance helps – only when done right

The KNP case should not discourage businesses from buying cyber insurance. Rather, it highlights the misconception that buying a policy alone is enough. Cyber insurance is not a substitute for cybersecurity. It only strengthens what already exists. But it cannot fill gaps created by neglect.

A well-designed cyber policy can cover:

• Data restoration
• Regulatory penalties
• Legal costs
• Business interruption
• Third-party liability
• Ransom negotiation support
• Forensic investigations
• PR & crisis communications

But none of it works unless the insured organization demonstrates discipline: strong passwords, MFA, secure backups, trained employees, tested controls, timely reporting etc.

insurancepe believes that cyber insurance is a critical financial backbone that strengthens existing cybersecurity, but insurance only works when organisations do cybersecurity right. For their own sake, and for the sake of abiding by a cyber policy’s terms and conditions.

This blog post is brought to you by the minds at insurancepe!

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