Cyber Insurance For Municipalities: A Broker’s Guide
As technology continues to evolve and provide hackers with more sophisticated ways to launch attacks, organizations must prioritize security against rampant cyber attacks. From private businesses to nonprofits and local municipalities, leaders should consider the growing number of cyber threats that could affect their organizations.
According to IBM's most recent report, the average cost of some of the most common cybersecurity attacks, such as data breaches, ransomware attacks, and single destructive attacks, ranged from $4 to $4.5 million.
But despite the alarming statistics, most municipalities don’t implement essential cybersecurity measures, making them highly vulnerable to cyber-attacks.
As a broker, now is the perfect time to get involved. In this article, we will discuss what you need to know about cyber insurance for municipalities if you want to tap into selling to this market.
The Importance of Cyber Insurance for Municipalities
The primary reason state and local entities would want to purchase cyber insurance are to cover financial losses from a cyberattack, such as the costs of breach notifications, ransom, forensics, and legal fees, to name a few. Depending on the policy, municipality cyber insurance programs can also cover data restoration and the cost of regulatory fines imposed when a municipality fails to protect personal information.
Why do Cybercriminals Target Municipalities?
Government agencies are highly attractive to hackers because their systems contain vast amounts of information on business organizations and private residents. And because taxpayers' money is the fundamental budget source of most municipalities, they operate on limited budget resources where IT department allocations may be little to none. At the same time, the technology they use may be outdated. So whenever municipalities experience cyber-attacks, the consequences can be detrimental.
3 Most Common Cybersecurity Threats Affecting Municipalities
Ransomware is a specific type of malware that controls and disrupts the victim’s files. Essentially, the software blocks the victim’s ability to access the system unless a sum of money is paid.
If a ransomware attack happens to the public sector, the crime can cause a ripple effect, preventing many other government agencies from rendering essential social services. For example, an attack on Georgia's city networks in 2020 left residents unable to access and pay for parking tickets or water bills.
Phishing is a reformed version of cyber espionage, typically masked by a phone call, text message, or email.
This type of cyber threat works by sending messages that appear to be from legitimate organizations. The message typically contains a link or file that will redirect the municipality's representative to a fake website that looks like the real thing.
After this, the user will be asked to provide the municipality's sensitive information, such as:
- Routing numbers
- Banking details
- Personal identification information
- Login credentials such as usernames and passwords
- Security codes (for multi-factor authentication purposes)
3. State-Sponsored Attack
A State-sponsored attack is when a foreign country leverage's an attack on another country as a form of cyber warfare. Hackers can steal money, access highly classified information, and even cripple a country's economy. These attacks can be extremely dangerous and also put the well beings of citizens at risk. For example, since the start of the Russian-Ukraine war, the U.S. government has issued several warnings of potential Russian state-sponsored attacks and has significantly increased cyber security.
Difficulties Securing Cyber Insurance For Public Entities
As a broker, it’s vital to educate your potential municipality client about the importance of effective cyber insurance coverage because it can thoroughly mitigate cybersecurity risks. However, it can be difficult for municipalities to acquire coverage.
Here are certain factors that hinder local entities from acquiring municipality insurance programs:
- Lack of preventative measures in place to safeguard data (multi-factor authentication, robust firewall, patch management, etc.)
- High premium costs
- Extensive applications and technical requirements
- Lack of coverage options from carriers due to high-risk exposure
The Best Cyber Insurance for Public Entities
Nowadays, getting cyber insurance or applying for a renewal for any company or organization can be difficult. It's traditionally been a manual and time-consuming process with a long checklist of requirements. On top of that, premiums are often too expensive for public entities’ budgets. Fortunately, this is exactly why 1Fort exists!
1Fort empowers brokers and companies with navigating the complex process of securing cyber insurance. With our all-in-one platform, we help automate the work required to get cyber insurance and unlock better coverage and savings. By automating security questionnaires and providing resources on remediating gaps to become insurable, 1Fort simplifies the entire process.
Reach out to us and schedule a demo with our team to learn more.