Ransomware & Municipalities – Update

Another major municipality is suffering from a crippling ransomware attack (see our prior post), although Cyber Insurance (also called Data Breach, Privacy and Network Security insurance coverage) will help in this case.

According to reports (see here), a ransomware attack shut down Baltimore’s computer systems on May 7^th and hackers demanded 13 bitcoins (approx. $75,000) to obtain the encryption keys needed to release the data and systems access.  All systems have been impacted, although the city is doing its best to provide services.

The situation has not been resolved as of the date of this article, nearly two weeks later, and the ransom demand is increasing by approximately $10,000 per day (see here).  The city continues to use manual processes and other workarounds to key systems in order to provide some level of service to its residents. 

The city has indicated that it will not pay the ransom (see here).  Instead, it is relying on experts and its staff to rebuild and recover key data and systems.  There is no easy answer on whether to pay the ransom or not, and no guarantee that the data and systems will be released once the payment is made, but some experts strongly recommend quick payment of the ransom demand (see here). 

The city has Cyber Insurance in place, with a $50,000 deductible (see here), although the exact coverage is not public.  Cyber Insurance is an essential coverage for municipalities of all sizes for protection from both criminal attacks and employee error, including ransomware attacks.  Not only does comprehensive Cyber Insurance include coverage for the ransom demand, it also covers business interruption losses.  Business interruption costs are typically many times greater than the ransom demand.

eSpecialty Insurance is your specialty insurance expert.  We have developed a streamlined marketplace to provide multiple proposals from a range of competitive insurers, along with expertise to help you evaluate your exposures and choose the best combination of comprehensive coverage and price.  We look forward to working with you.