Cyber Risk Threatens Municipal Services, Not Just IT Systems
Will Coverage Be Available?
Cyber losses continued rise in 2021, particularly from an influx of ransomware incidents. While cyber premium rates are rising sharply, concerns remain whether cyber carriers can continue to successfully provide cyber coverage in the future. Insurers are taking underwriting action by eliminating coverage for items such as social engineering, which includes impersonating an individual or company through fraudulent emails.
What Does Cyber Insurance Cover?
Cyber insurance began as a secondary line and an endorsement on an insurance policy, but now cyber security is a primary component and essential ingredient of a municipality's risk management program.
Great American Fidelity Insurance Company is the cyber carrier for the SC Municipal Insurance and Risk Financing Fund for the 2022 program year. For eligible members, Great American provides $1 million in liability expense coverage and a $5 million pool aggregate. Coverage is not provided for perils such as fraudulent instruction including written or electronic instructions used to commit fraud; telephone fraud and funds transfer fraud.
Great American provides coverage for first party losses, including forensics, notification, identity monitoring, breach coaching, data restoration, systems restoration, extortion costs and business interruption.
The coverage also provides for third-party liability, which includes defense expense, damages, pre-judgment interests, judgments, and post judgment interests and settlements.