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The Cyber-Threat Lane

Posted 6/30/2019

By R. Bruce Wright, CPCU

When I was young, many years ago, the euphemism that was used to (somewhat) more politely say, “Mind your own business,” was “Stick to your knitting.” I don’t hear that much anymore, but instead we now often hear a different expression for this euphemism, which is, “Stay in your lane.”

RE-marks and I are firmly in the lane of promoting safety for electric distribution utilities, while your local agents’ lane is the provision and sale of insurance products that Hurtado & Associates, working with their underwriters, have developed to meet your needs. But on rare occasions there are times when these lanes get very close together, not crossing, but surely adjacent. This is one of those times.   

I recently saw an article in the daily paper about a town that was hit by cyber hackers. These miscreants penetrated the City’s electronic security and “paralyzed” the computer systems. True, it was a city government and not an electric distribution utility, but it did cause me to wonder if everyone who sees this newsletter has made sure that their utility is using up-to-date protective systems and had secured cyber-security insurance coverage. 

So that you have a better idea of the magnitude of the risk, here’s a brief excerpt from the article along with a link to the original posting for those interested. 

From the New York Times, June 19, 2019 

MIAMI — The leaders of Riviera Beach, Fla., looking weary, met quietly this week for an extraordinary vote to pay nearly $600,000 in ransom to hackers who paralyzed the city’s computer systems.

Riviera Beach, a small city of about 35,000 people just north of West Palm Beach, became the latest government to be crippled by ransomware attacks that have successfully extorted municipalities and forced them to dig into public coffers to restore their networks. A similar breach recently cost Baltimore $18 million to repair damages 

Even large cities, however, have had to pay smaller ransoms than Riviera Beach. On Monday, the City Council unanimously agreed to have its insurance carrier pay the hackers 65 Bitcoin, a hard-to-trace digital currency, amounting to about $592,000. By making the payment, the City Council hopes to regain access to data encrypted in the cyberattack three weeks ago, though there is no guarantee the hackers will release the data once payment is received.

Full article can be found here.

If your utility has obtained this type of coverage, great! If not, I sincerely hope that this will prompt you to contact your agent, or have your insurance buyer contact your agent, to look into your options. Through this program, your agent has access to the resources of the Managing General Agency, Hurtado & Associates, who can provide cybersecurity coverage through a number of well known carriers. While no one can guarantee that you will have no exposures to loss, the program’s coverages are as broad as possible, with coverage for both liability and first party losses, including recovery and extortion costs. 

And, in the theme of an ounce of prevention vs. a pound of cure, do you think that if this happened to you, your Board might wish that they had paid a few thousand dollars of premium rather than coming up with hundreds of thousands in ransom?  Yup, I do too.