A growing number of governments are purchasing the coverage due to the rapidly increasing risk.
Though more local governments than ever are now covered by cyber insurance due to the rising risk of cyberattacks and ransomware, the trend is headed in a direction of increased rates for decreasing coverage.
Higher premiums, deductibles and security protocol scrutiny are coming with the rising risks.
As a result, it is becoming more expensive for municipal governments to be able to obtain cyber insurance against these types of digital attacks. The cost of premiums for this type of coverage has risen sharply in recent years as hackers have started targeting governments at all levels, particularly with ransomware attacks.
Moreover, beyond premiums, coverage limits have been dropping, which has required local governments to have to greatly increase their security protocols to even qualify for the reduced coverage.
This year, there was an average 300 percent increase in the cost of local government cyber insurance.
This, according to Local Government Insurance Trust data, a member-owned organization that provides pooled coverage to 191 municipalities in Maryland.
“For the coming year, we are expecting possibly even higher pricing with more limited coverage than we currently have,” said Tim Ailsworth, the organization’s executive director.
In 2021, the rise in the cost of this coverage was mainly absorbed by the organization’s pool. However, according to Ailsworth, if those prices keep climbing, it will mean that participating municipalities will be facing increases as well.
In order to help members to be able to protect themselves from digital attacks, Ailsworth said that the organization is working with a cyber consulting firm that provides daily updates to municipalities with regards to the types of threats currently taking place. It also provides municipalities with coaching with respect to the best security information and practices for computer network security upgrades.
In this way, the prevention efforts are meant to complement the cyber insurance coverage. In order to drive down the risk, reduce the premiums that need to be paid, and decrease the likelihood that a cyberattack claim will need to be filed in the first place.