Exhibit 1 - Agenda Information SheetCity of Denton
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AGENDA INFORMATION SHEET
DEPARTMENT: Procurement
ACM: Cassey Ogden
DATE: October 24, 2023
SUBJECT
Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation,
ratifying the expenditure of funds by the City Manager for emergency excess cyber network liability
insurance coverage for the City of Denton through the City’s broker of record, Lockton Companies, LLC;
and providing an effective date (File 8343 – awarded to Corvus Insurance Agency, LLC, in the three (3)
year not-to-exceed amount of $231,156.00).
STRATEGIC ALIGNMENT
This action supports Key Focus Area: Pursue Organizational Excellence and Collaborative and Respectful
Leadership.
INFORMATION/BACKGROUND
The City of Denton purchases cyber network liability coverage should the City become a victim of malware,
data breach, or ransomware.
Given the complexities of this insurance product solicitation and given that Chapter 252.024 of the Texas
Local Government Code allows the City to utilize the services of our insurance broker of record, Lockton
Companies, LLC (Lockton), to assist with competitively procuring this coverage.
State of the Cyber Insurance Market:
Cyber network liability has become a significant threat to municipalities. Cyberattacks on municipalities
and governments are growing at an alarming pace, with no regard to size, location, or agency type. Local
cities have reported millions of dollars in ransomware costs, including paying ransoms, retooling systems,
and missed revenue.
In recent years, insurance companies have doubled cyber insurance premiums and implemented strict
requirements for specific security controls that municipalities must have before obtaining cyber insurance.
Despite the challenging cyber security landscape for municipalities, increased competition and carriers’
focus on growth have resulted in present conditions in the cyber insurance market that are more favorable
than just a quarter ago. After sizable rate increases over the past two years, insureds are now able to renew
at flat rates or with 5%-7% rate reductions. While the current market conditions are a relief, insurers are
closely monitoring emerging cyber threats, and the current favorable market is expected to be short-lived
due to ransomware attacks on other municipalities and the associated claims activity earlier this year.
City Hall
215 E. McKinney Street
Denton, Texas
www.cityofdenton.com
The softer cyber insurance market allowed the City to enhance the current cyber liability insurance coverage
by purchasing a primary cyber liability policy and an excess cyber liability policy to provide an added layer
of protection to the City’s self-insured program. Homeland Insurance Company of New York (Resilience)
and the incumbent carrier, Corvus Insurance Agency (Corvus), presented the most competitive retentions
(deductibles) terms and conditions, and pricing. Resilience offered an increased primary limit of $3M and
generated premium savings by bundling the policy with their EDGE Cybersecurity Services and Resources
package. As the incumbent on the current cyber liability policy, Corvus leveraged their relationship with
the City and offered an excess coverage package that provided an additional $2M in limit in addition to the
$3M limit provided by the primary policy through Resilience. The combination of the primary and excess
policies provides the City with a total of $5M in coverage.
Despite the current favorable cyber liability market, challenges in the municipal cyber liability insurance
market have been present for several years, with several high-profile ransomware attacks significantly
impacting municipalities in recent months. In the event the market returns to the hardened state of the last
few years and the potential impact of a loss, a conservative increase of 30% year over year was used in the
above calculations to ensure the City has adequate spending authority approved for future policy renewals
for the 2024/25 and 2025/26 policy years.
RECOMMENDATION
Approve the purchase of excess cyber network liability insurance coverage for the City of Denton, in a (3)
year not-to-exceed amount of $289,380.
PRINCIPAL PLACE OF BUSINESS
Lockton Companies, LLC
Kansas City, MO
ESTIMATED SCHEDULE OF PROJECT
This is a three (3) year contract.
FISCAL INFORMATION
This policy is budgeted and funded from the Risk Retention Fund account 860002.6704. Requisition
#161957 has been entered into the Purchasing software system in the amount of $52,667.11. The budgeted
amount of this item is $289,380.
EXHIBITS
Exhibit 1: Agenda Information Sheet
Exhibit 2: Recommendation Letter
Exhibit 3: Ordinance
Respectfully submitted:
Lori Hewell, 940-349-7100
Purchasing Manager
For information concerning this acquisition, contact: Sarah Kuechler, 940-349-8356.
Legal point of contact: Marcella Lunn at 940-349-8333.