Mike McGinnis, board president of a condominium in Spokane, Wash., was surprised earlier this year when his community association changed insurance carriers and he discovered that the new policy did not include cybersecurity protection.
“Our debate was paying out an additional $700, which could go to upgrading, say, our security cameras,” McGinnis says. “Is our cyber risk large enough that we want to spend that, as opposed to using those resources somewhere else on an aging building?”
The Spokane condominium board is not alone in wrestling with questions about the rapidly changing field of cybersecurity.
Cybercriminal activity has been steadily rising over recent years and was expected to inflict damages worth $6 trillion across the world in 2021, double the $3 trillion estimated in 2015, according to Cyber Security Ventures.
While large-scale cyberstrikes are most talked about, community associations should not consider themselves invulnerable. Mary Ellen Seale, director of the National Cyber Security Society, notes that many states post information about condominiums and homeowners associations on publicly accessible registries. These listings can become starting points for bad actors who are looking for opportunities.
“You really need to think about what information you share, who you share it with, and what you have of value,” Seale says.
Some communities protect their members by not storing sensitive information like Social Security numbers and by keeping multiple backups of a community server. In the event of an attack, a community with backups can recover by simply repopulating the system.
Not surprisingly, cyber insurance claims and payouts are increasing, with premiums rising an average of 25.5% in the second quarter of 2021 alone, a recent survey found. Despite this, experts like Los Angeles-based insurance broker Kevin Davis and Edward Mackoul, president of Mackoul Risk Solutions in New York and New Jersey, agree that cyber insurance is a relative bargain. The cost can vary for community associations, but they say annual policy premiums are typically $1,000 or less.
Ultimately, each community should understand their risks, evaluate cybersecurity protection, and decide whether specialized insurance is worth the cost. “My goal is to protect the best interests of our homeowners and also have a quality place where they feel safe—personally, but also safety in their information and everything else,” McGinnis says.
>>Read more about cybersecurity protection in community associations in “Calculated Risk” from Common Ground March/April 2022.
>>Access CAI’s “Defending Your Community from Ransomware and Other Cyber Threats” webinar to learn more about the threats your community faces.