Your cyber insurance qualification guide (And yes, you do need it!)

Data breaches cost organizations an average of $4.88 million in 2024. This is up 10% over the last year and constitutes the highest total ever. As cyber threats evolve and intensify, businesses find themselves playing a high-stakes game where the rules change daily, and the consequences of losing can be catastrophic.

Cyber insurance offers a potential safety net, but insurance providers are continuously raising the bar for organizations looking to get covered. They’re scrutinizing applicants more closely, demanding robust security measures, and often declining coverage to those who fall short. Many organizations, particularly small and medium-sized enterprises, struggle to meet these stringent requirements.

This leaves organizations facing a critical question: How can they make themselves viable candidates for cyber insurance?

Do you even need cyber insurance?

Cyberattacks don’t discriminate. From multinational corporations to local small businesses, no organization is immune to the rising threat of digital breaches. The financial fallout from these incidents extends far beyond immediate losses, encompassing business interruption, reputational damage, potential legal liabilities, and more.

Cyber insurance can help organizations weather the storm. It covers direct costs like ransomware payments and system rebuilds as well as indirect expenses such as business interruption and reputational damage control. (Just make sure ransomware, social engineering, and phishing are covered in the policy, not listed as policy exclusions.) Moreover, many policies provide access to expert resources for incident response and recovery.

Beyond financial protection, cyber insurance is becoming a compliance necessity. Many industry regulations and client contracts now require organizations to maintain specific levels of cyber coverage and adhere to the NIST cybersecurity framework. Failing to meet these requirements can lead to lost business opportunities and regulatory penalties.

So, really, the question isn’t whether businesses need cyber insurance. It’s whether they can afford to operate without it.

The difficulty of obtaining cyber insurance

Insurers have tightened the reins on cyber coverage. This stems from a perfect storm of factors: increased claim frequency, rising severity of attacks, and the growing complexity of cyber threats.

Insurers demand robust security measures, comprehensive risk assessments, and demonstrated cybersecurity best practices, including monitoring and detection, vulnerability management, employee training, incident response and business continuity, multi-factor authentication (MFA), and endpoint detection and response (EDR).

The challenges extend beyond just meeting requirements. Rising premiums and reduced coverage limits have made cyber insurance a significant investment. Some industries, deemed high-risk, struggle to find affordable coverage at all. Meanwhile, the lack of standardization across the insurance industry means that what qualifies as “adequate security” can vary widely between providers.

For many organizations, obtaining cyber insurance has become a revealing — and sometimes uncomfortable — audit of their security posture. It forces them to confront gaps in their defenses and often requires significant investments in technology and processes. (Although, implementing new security solutions or improving existing solutions to follow best practices can sometimes be used to negotiate lower premiums.)

While daunting, this challenge presents an opportunity to strengthen overall cybersecurity practices and build a more resilient organization.

How to turn the challenge into an opportunity

The journey typically begins with a comprehensive security assessment. This uncovers vulnerabilities and prioritizes necessary improvements. For many, this assessment reveals the need for fundamental security measures that insurers now consider non-negotiable.

MFA often emerges as a top priority. Implementing this across critical systems satisfies an essential insurer requirement and provides defense against unauthorized access attempts. Similarly, deploying EDR addresses insurers’ demands for real-time threat monitoring and swift incident response capabilities.

As organizations tackle these technical measures, they often discover they need enhanced employee training. Regular cybersecurity education programs, covering topics from phishing awareness to safe browsing practices, address the human element of security that insurers scrutinize closely. This focus on the human factor complements technical solutions like robust data backup and recovery processes, which insurers view as essential for ensuring business continuity.

Vulnerability management becomes an ongoing priority. Frequent assessments and timely patching demonstrate a proactive approach to addressing security weaknesses. This extends to incident response planning, with insurers expecting well-documented and frequently tested procedures that can reduce the impact of a cyber event.

Access controls and identity management practices round out the core security measures. Implementing principles of least privilege, conducting consistent access reviews, and maintaining strict offboarding procedures all contribute to a secure environment that meets insurer standards.

Many organizations discover that adopting a recognized cybersecurity framework, such as NIST or ISO 27001, provides a holistic approach that aligns closely with insurer expectations. Additional measures like network segmentation and data encryption further demonstrate a mature approach to risk management. These practices, as well as maintaining compliance with relevant data protection regulations and participating in threat intelligence sharing programs, not only satisfy insurer requirements but also contribute to a more adaptive and robust security posture.

Expert guidance for a complex process

Unfortunately, cyber insurance requirements often read like a labyrinth of technical jargon and seemingly impossible standards. SHI can help you cut through the noise.

Our Security Posture Review (SPR) provides a clear picture of your current security landscape. This comprehensive assessment covers everything from external vulnerabilities to data loss prevention, giving you actionable insights to prioritize improvements.

SHI’s expertise extends to the cloud, where our SHI One platform simplifies management across major providers to enhance visibility and control. If you’re struggling with identity and access management, our solutions can help you implement zero trust architecture to address internal threats and data protection concerns.

We understand that technology is only part of the equation. That’s why we also offer cybersecurity workshops and training programs to help your organization build a security-aware culture.

Our approach isn’t about quick fixes or ticking boxes. We’re here to transform your security posture and work with you to turn the challenge of obtaining cyber insurance into meaningful, lasting improvements.

Ready to strengthen your security and increase your cyber insurance prospects? Contact SHI, and let’s build a more secure future for your organization.