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Managing Cyber Insurance for Cities

Hackers who employ ransomware attacks target municipal governments more than they do any other group or industry even more than schools or healthcare organizations, and for good reason — municipalities are often poorly-equipped to handle these kinds of attacks. Many municipalities do not have basic cybersecurity measures in place, such as multifactor authentication, also known as MFA; endpoint detection and response, or EDR; and data backup.

Because municipalities are vulnerable to cyberattacks, like ransomware attacks, insurers take steps to protect themselves such as raising premiums on municipalities to a very high level. They may also tie lower premiums to a municipality’s implementation of cybersecurity best practices.

Here are questions and tips for municipal officials to consider when navigating the cyber insurance environment.

How can municipalities make sure they can acquire cyber insurance as affordably as possible?

In order to be considered for cyber insurance, municipalities should proactively assess their cyber controls and mitigate any vulnerabilities. At a minimum, cyber carriers expect cities to take these steps:

  • Have multifactor authentication in place.
  • Use Microsoft Office 365 as well as Office 365 Advanced Threat Protection.
  • Pre-screen emails for malicious attachments and links.
  • Back up key servers and data at least monthly.
  • Use isolated backups that aren’t connected to the city’s network.
  • Regularly test restoring data and information backups.
  • Conduct regular phishing training.

If a municipality doesn’t have those controls in place, they may be ineligible for coverage or they may face higher premiums and deductibles.

How is the Municipal Association of SC helping members with cyber insurance?

Members of the Municipal Association of South Carolina’s property and liability program, the South Carolina Municipal Insurance and Risk Financing Fund, receive a limited amount of cyber coverage directly through SCMIRF. If a SCMIRF member city applies and is approved, then SCMIRF will pay the cost of a commercial cyber liability policy that provides higher limits and coverage for first-party losses which are losses experienced by the insured city. This covers things like data breach forensics, identity monitoring, breach coaching, data or systems restoration and business interruption.

The coverage also provides for third-party coverage for those who are not the policyholder but who experience losses. This covers items like damages, judgements and settlements.

Members of the SC Municipal Insurance and Risk Financing Fund have access to the eRiskHub as a resource for innovative cyber risk management solutions. Learn more at (keyword: SCMIRF).