NB city's insurance costs could surge due to ransomware incident

NB city's insurance costs could surge due to ransomware incident | Insurance Business

NB city

The list of cities experiencing a surge in their municipality insurance rates at the turn of the new year grows – but this particular city’s costs could bump up in 2021 due to its increased cyber exposure.

The city of Saint John, NB is looking at a potential 26% increase to its insurance costs, but there are concerns that the amount could potentially increase depending on how much insurers will charge the city upon renewal of a cyber liability policy.

"The insurance industry is in a hard market not seen in 20 years," said Ian Fogan, director of strategic affairs for the city of Saint John, in a report to the city council.

"Our overall increase to the entire insurance portfolio is approximately 26%. For comparison, Halifax is experiencing a 45% increase, Moncton a 25% increase and St. John's is seeing a 60% increase."

Fogan also noted that he cannot get a definitive quote on cyber liability premiums for all of 2021. He explained that the city’s current insurers have only agreed to extend the current policy until March 01, 2021, while they review Saint John’s most recent claim and its risk exposure.

At the moment, the city is working with a quote of $4,309, for renewing its cyber liability policy until the end of February. That quote is for an insurance policy that provides $2 million in coverage with a $50,000 deductible.

The city discovered on November 13, 2020 that it had suffered a ransomware cyberattack. It responded by shutting down the Saint John city website and its online payment system.

But to this day, the final costs of that cyberattack and the subsequent recovery efforts have yet to be disclosed, said councillor Shirley McAlary. There has been no news about the cyberattack since November 27, 2020.

"I don't know if they know that yet," McAlary told CBC News. "I haven't heard."

CBC News reached out to Gemini Advisory – a cybersecurity firm that had previously discovered that the city of Saint John was hacked in 2018 as part of the click2gov software exploit – for insight into the latest ransomware attack.

"Gemini has not found stolen payment card data from the City of Saint John in the dark web from this [latest] cyber incident," Gemini Advisory intelligence production lead Christopher Thomas said in a statement.

"It does appear to have been hit by ransomware, which aligns with the larger cybercriminal trend of attacking and extorting municipalities."

But while Saint John’s cyber exposure could hurt its cyber liability premiums, the biggest impact to its total insurance costs could come from property premiums. CBC News reported that last year, the city’s property insurance premiums were $268,167, but for this year, they have spiked to $416,607.

"The combined effect of increases in value and the rate increase yields an overall premium increase of 55 per cent," Fogan said in his report.