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Board approves Gallagher insurance renewal and a proposed increase in cyber coverage to $5 million
Summary
The authority approved a $166,196 annual insurance renewal package brokered by Gallagher and discussed a requested increase in cyber coverage from $1 million to $5 million; board members debated budget coverage and recent cyber vulnerabilities.
The Hospital Authority Board approved the hospital’s insurance renewal placed through Arthur J. Gallagher, including directors-and-officers, crime, cyber and excess/umbrella coverage, with a total annual premium of $166,196 and a proposed cyber limit increase to $5 million.
Christy Lewis, the hospital’s chief compliance officer, presented the renewal and said the request reflects industry benchmarking that shows health care faces more cyber incidents than other sectors. Lewis outlined a request to raise cyber coverage from $1,000,000 to $5,000,000 and said the premium difference for that option is approximately $39,383. She told the board she had discussed the change with the interim CFO and that the CFO would review budget availability.
Lewis gave the board a brokerage-fee breakdown included in the packet: a 15% commission for directors-and-officers, 20% for crime, 10% for cyber and 14% for the excess/umbrella line. She said Gallagher conducted a market approach to carriers and recommended remaining with incumbent carriers given a leadership transition during the renewal cycle.
Board members pressed on funding and risk. Melanie Thomas, the hospital’s chief information officer, reminded the board of a cyber incident about three years earlier and said the hospital had absorbed costs at that time. Thomas said health care institutions are frequent targets because of the sensitivity of patient data.
Lewis said some operational savings already taken (telecommunications adjustments) could help cover the increase and that staff would provide documentation of those savings if needed. A board member suggested the matter could be brought to the full board for additional consideration; the motion to approve the renewal with the $5 million cyber option was then made and passed.
Outcome: Motion passed; the renewal will be implemented as presented with the $5 million cyber limit option subject to final budget confirmation.
Ending: Staff will confirm budget treatment for the premium increase and document savings that can offset the additional cyber premium.
