Businesses everywhere are feeling the impact of rising cyber insurance premiums. Insurers are tightening their requirements, making it more difficult—and more expensive—to get adequate coverage. If your business relies on cyber insurance for financial protection, you may have noticed higher premiums, stricter security requirements, and even new exclusions in policies.
Why is this happening? The increasing frequency of cyberattacks, costly ransomware incidents, and gaps in security controls have led insurers to reassess their risk exposure. Businesses that haven’t implemented key cybersecurity measures are being labeled high-risk—and that risk comes at a price.
If your premiums have skyrocketed or you’re struggling to meet policy requirements, there’s good news: You have control over many of the factors influencing your rates. By improving your cybersecurity posture, many insurers will consider your policy to be a lower-risk, potentially qualifying for better coverage, lower costs, and stronger policy terms.
Why Are Cyber Insurance Costs Rising?
Several factors are driving up cyber insurance premiums, making it harder for businesses to secure affordable coverage:
1. Increased Cyber Threats
Ransomware, phishing, and data breaches are happening at an alarming rate. According to cybersecurity reports, ransomware attacks alone increased by over 100% in the last two years, with businesses of all sizes becoming prime targets.
Every claim made against an insurance policy increases costs for insurers. The more businesses that experience security breaches, the higher premiums go for everyone.
2. Stricter Policy Requirements
Cyber insurers are adopting methods to validate your security posture. Many now require proof of security measures before approving a policy or processing claims. Businesses that don’t meet specific cybersecurity standards may face coverage denial or much higher rates.
Some of the most common security controls that insurers require include:
- Multi-Factor Authentication (MFA)
- Managed Detection and Response (MDR)
- Regular security assessments and penetration testing
- A well-documented incident response plan
If your business lacks these protections, your policy will cost more, payout less, or worse, you may not be able to get coverage at all.
3. Lack of Preventative Security Measures
Companies without a strong cybersecurity posture that includes proactive security measures are now seen as too risky to insure. Even if you’ve never experienced a breach, the absence of proactive security measures raises red flags for insurers.
The reality is that cyberattacks are not just a possibility—they’re an inevitability. Businesses that fail to adopt modern security best practices may find themselves paying excessive premiums or unable to qualify for coverage altogether.
4. Third-Party Risks
Your cybersecurity posture isn’t the only thing affecting your rates. If your business relies on vendors, suppliers, or cloud providers, their security practices may impact your risk profile.
For example:
- If a third-party payment processor experiences a breach, your business could be held liable for stolen customer data.
- If a vendor doesn’t follow strong security practices, doing business with them exposes your business to more risk.
Insurers look at who you work with just as much as they look at how you secure your own systems.
What Insurers Look for in a Security Program
To lower your cyber insurance costs, it’s critical to align your security strategy with insurer expectations. Most policies now require businesses to have:
1. Multi-Factor Authentication (MFA)
MFA is one of the leading security requirements for cyber insurance policies. Insurers expect businesses to enable MFA for environments that handle customer or employee data:
- Email accounts
- Remote access systems
- Cloud applications
- Financial systems
Without MFA, your premium will be higher—or you may not qualify for coverage at all.
2. Advanced Endpoint Protection & Threat Monitoring
Traditional antivirus software isn’t enough anymore. Insurers look for:
- Endpoint Detection and Response (EDR) solutions
- Next-Generation Antivirus (NGAV) tools
- Managed Detection and Response (MDR) services
These solutions proactively monitor your key infrastructure for cyber threats, helping businesses stop attacks before they become costly breaches.
3. Regular Risk Assessments and Penetration Testing
Businesses that regularly assess their security posture are considered lower risk. Insurers prefer companies that conduct:
- Annual penetration testing
- Quarterly vulnerability scans
- Routine security audits
Demonstrating that your business is proactively managing risk can help lower premiums.
4. Employee Cybersecurity Training
Human error is the cause of over 80% of cyber breaches. Insurers want to see that businesses are:
- Training employees on phishing awareness
- Implementing strong password policies
- Running security awareness programs
Well-trained employees reduce the risk of breaches, making businesses more insurable.
5. Incident Response and Business Continuity Plans
Insurers favor businesses with documented and tested response plans. If an attack happens, they want to know:
- Who is responsible for handling the breach?
- How fast your business can recover?
- What steps you take to minimize damage?
Without a plan, businesses take longer to recover—and insurers see that as a financial risk.
Cybersecurity Checklist: 7 Steps to Secure Better Coverage and Lower Costs
Want to strengthen your cybersecurity and lower your premiums? Follow this checklist:
- Enable multi-factor authentication for all critical accounts
- Deploy endpoint security, Endpoint Detection and Response, or Managed Detection and Response solutions
- Conduct regular risk assessments and penetration testing
- Train employees on cyber hygiene and phishing awareness
- Implement and test an incident response plan
- Require third-party vendors to meet cybersecurity standards
- Encrypt sensitive data in transit and at rest
By taking these steps, your business can be seen as a lower-risk to your insurer, leading to better policy terms, coverage and premium rates. Some businesses have seen thousands of dollars in savings.
Take the Next Step: Set Up a Cyber Risk Assessment
Want to know if your business meets insurer expectations? A Cyber Risk Assessment can review your current cybersecurity posture to identify strengths and gaps in meeting top requirements used by insurers.
At Deerwood Technologies, we help businesses implement security controls that satisfy insurer demands while strengthening overall cybersecurity. Let’s discuss how you can optimize your security posture and reduce your cyber insurance burden.
FAQs
Why are cyber insurance premiums increasing so quickly?
Cyber insurance costs are rising due to the surge in ransomware attacks, data breaches, and evolving cyber threats. Insurers are adjusting rates to account for higher risks and payouts.
What cybersecurity measures can help lower my cyber insurance premiums?
Insurers look for multi-factor authentication, endpoint security, employee training, regular risk assessments, and incident response plans. Strengthening these areas can reduce costs.
Can my business be denied cyber insurance coverage?
Yes, insurers may deny coverage if your business lacks basic security measures like MFA, encryption, or an incident response plan. Meeting security requirements is crucial.
What industries face the highest cyber insurance costs?
Highly targeted industries like healthcare, finance, and legal services often face higher premiums due to the sensitive data they handle and the increased risk of cyberattacks.
Do insurers require a cybersecurity assessment before issuing a policy?
Many insurers conduct risk assessments or require businesses to submit security questionnaires to evaluate their cybersecurity posture before approving coverage.
What happens if my business experiences a breach and I don’t meet my policy’s cybersecurity requirements?
Failing to meet insurer security requirements could result in denied claims, reduced payouts, or even policy cancellation. Ensuring compliance with policy terms is essential.
How does MFA impact cyber insurance eligibility and pricing?
Multi-factor authentication is one of the most common cyber insurance requirements. Without it, businesses may face higher premiums or be ineligible for coverage.
Can cyber insurance cover ransomware payments?
Some policies cover ransomware payments, but many insurers now require businesses to prove they have preventive measures in place, like endpoint security and offline backups.
What steps should I take before applying for cyber insurance?
Before applying, conduct a cybersecurity risk assessment, implement MFA, strengthen endpoint security, train employees, and document an incident response plan to improve eligibility and pricing.