If you’re seeking cyber insurance (or renewing your policy), be prepared: insurers will probe your IT security practices in detail to verify that you meet the minimum cyber insurance requirements. The days of cheap, no-questions-asked cyber insurance are over. Now underwriters want proof that you’ve implemented specific controls to reduce risk. In fact, many policies will refuse coverage or deny claims if certain baseline controls aren’t in place.
So what are the key cyber insurance requirements insurers expect from businesses today? Let’s break down the main ones and why they matter:
- Multi-Factor Authentication (MFA) – Mandatory: Nearly every cyber insurance requirements includes MFA for certain access at a minimum. 51% of businesses must have MFA just to qualify for coverage, per industry data. Specifically, underwriters look for MFA on: remote network access (VPN, RDP, etc.), email accounts (like Office 365/Gmail logins), and any privileged/admin accounts. They may also expect MFA on critical third-party services (banking portals, etc.). If you don’t have MFA deployed in these areas, many insurers won’t bind a policy. And it’s for good reason – credential theft accounts for 55% of ransomware attacks. MFA is a proven defense. Action item: ensure MFA is enabled company-wide, especially before filling out insurance applications.
- Endpoint Detection and Response (EDR) and Anti-Malware: Insurers want to know you have advanced threat protection on your computers/servers. Traditional antivirus is good, but next-gen EDR is better at catching ransomware and zero-day attacks. Expect questions like: “Do you deploy EDR on all endpoints?” Some carriers require it; others strongly recommend it and may give better rates if you have it. For example, Coalition (a leading provider) lists Endpoint protection (EDR) on all devices” as a must-do. If you lack a fancy EDR, at least have reputable antivirus everywhere and enable things like Windows Defender’s advanced features (it’s an EDR-lite). Underwriters essentially want assurance that if malware slips past defenses, your endpoint security can detect and contain it.
- Data Backup and Recovery Procedures: Backup is crucial not just for operations but as an underwriting point. Insurers often ask: “Do you back up all critical data? How often? Is backup stored offline or immutable? Have you tested restores?” They know a good backup can prevent a claim payout in a ransomware event (since you can restore without paying ransom). In fact, maintaining good backups is one of the top 5 security measures insurers look for (Coalition’s list). Some policies even specifically require that you have backups or they won’t cover certain losses. So, ensure you have a robust backup strategy: daily or more frequent backups for key systems, offsite/offline storage, and documented recovery plans. Pro tip: demonstrate you test backups – e.g., “we perform quarterly restore tests” – it gives underwriters confidence.
- Employee Security Training and Phishing Tests: Humans remain a huge risk, so insurers want to see you’re addressing that. Many ask if you conduct regular cybersecurity awareness training and phishing email simulations. Cybersecurity training is one of the most cost-effective controls, and insurers know it. Some insurers might not deny coverage if you lack it, but not having training could result in a higher premium or a social engineering fraud sublimit. On the flip side, showing a training program (even something basic like an annual training module + periodic phishing test results) can favorably influence underwriters. With phishing being the entry point for most breaches, this requirement has become common. Start a program if you haven’t – plenty of affordable platforms exist, or your IT provider can assist.
- Patching and Vulnerability Management: Insurers might not ask very granular patching questions, but they do often ask, “Do you apply critical patches within X days?” or “Do you use automated patch management?” Remember, unpatched software is a leading cause of claims (underwriters have seen the Equifax-type scenarios). One insurer report noted that organizations with poor patch management were much likelier to suffer a claim. So be ready to describe your patch process. Ideally: “Yes, we auto-install OS and application security updates at least monthly and have a system to track and remediate missing patches.” If you’re asked about specific high-profile vulnerabilities (Log4j, etc.), be prepared to show you reacted promptly. Some carriers or brokers may even run an external vulnerability scan on your network as part of risk assessment. A clean scan (no old, unpatched services exposed) will help your case.
- Access Controls – Least Privilege and Admin Security: Expect queries on how you manage privileged accounts. For example: “Do you have unique credentials for all admin accounts (no shared logins)?” “Is MFA enabled on admin accounts (yes, it should be)?” “Do you use administrative workstations or privileged access management (PAM) tools?” Now, most SMBs won’t have full PAM solutions, but insurers want to see that not every employee is an admin and that those who are admins are properly secured. One insurer guideline suggests implementing PAM or at least rigorous admin account controls. The principle of least privilege should be evident in your organization chart. If your receptionist has domain admin rights, that’s a red flag. Clean up excessive privileges before underwriting – insurers can reject a claim if it resulted from egregiously lax access controls (and at minimum it makes you look bad and could void coverage due to misrepresentation). So, articulate that you limit admin access, use separate accounts for admin tasks, etc.
- Network Security: Firewalls and Segmentation: They may ask if you have a firewall and if it’s properly configured (e.g., default deny rules, intrusion prevention enabled). Also, network segmentation is creeping into questionnaires, especially for larger SMBs. Marsh (an insurance broker) even says insurers prefer to see segmented networks to contain malware. They might ask if your OT network (if manufacturing) is separated from IT, or if your servers are on a different VLAN than user PCs. If you can say yes, it’s a plus. If you have any externally facing services, be ready to explain protections (are they behind a VPN or at least locked with MFA?). Demonstrating a thought-out network architecture with DMZs, etc., shows maturity.
- Incident Response Plan and Business Continuity: Insurers like to know you have an IR plan. The question might be simply, “Do you have a written incident response plan?” Ideally, you do – even a basic one counts. If you’ve also done an incident tabletop exercise or have retainer services with a breach response firm, mention it. This tells them if something happens, you’ll handle it efficiently, potentially minimizing costs. Business continuity measures (like the ability to work from backups, alternate sites, etc.) also reassure them that a cyber incident won’t wholly cripple you (leading to massive claims). Some insurers give better terms if you have certain certifications (e.g., ISO 27001) or have been through security audits – because it indicates strong processes including IR.
- Cybersecurity Framework or Audit Compliance: Indirectly, underwriters gauge if you follow any recognized security frameworks, like NIST CSF, CIS Controls, etc. They might not ask this outright, but the questions they pose map to those controls. For instance, the CIS Critical Controls include things like inventory of assets, MFA, backup, EDR – all mirrored in cyber insurance requirements. If you can volunteer that “We align our security program to the CIS Controls” or “We had a CMMC readiness assessment” or even “Our MSP follows SOC 2 standards,” it can instill confidence. In fact, companies with comprehensive security measures often secure better rates. If you have undergone any third-party security assessment, that report could be useful evidence to an underwriter.
- Fill Out the Application Honestly and Completely: This isn’t a control, but it’s critical – any control you claim to have , you must actually have to meet the cyber insurance requirements. If you say “Yes, we have 100% MFA,” but in reality your IT admin hasn’t enforced it for a few VIP users, that could void your coverage in an incident (because of misrepresentation). So, treat the application seriously. Loop in your IT team or provider to answer accurately. Document any “Yes” answers – e.g., if you say you do annual training, have records of that training. Insurers have denied claims where it turned out the insured didn’t actually do what they attested on the application. For example, one case cited an organization claimed to have daily backups but didn’t, and their claim was challenged. Don’t let that be you. Better to be transparent (and perhaps pay a slightly higher premium) than to lie and have no payout when you need it.
In summary
Underwriters expect SMBs to implement the kind of sensible controls that drastically reduce the frequency and severity of incidents. These cyber insurance requirements – MFA, EDR, backups, training, patching, etc. – are essentially the fundamentals of good security. They’ve become non-negotiable. A recent Symquest blog found that 44% of cyber insurance claims are rejected due to inadequate security controls. Insurers are literally using security as a filter for who to insure and who to pay. By investing in these controls, not only do you become a better risk (leading to coverage and potentially lower premiums), but you also genuinely protect your business from cyber harm.
Many SMBs partner with IT providers to meet these cyber insurance requirements. For instance, Cinch I.T.’s managed cybersecurity services can help implement everything from MFA to SIEM monitoring, ticking those insurance boxes. In some cases, insurers even ask if you have a managed security or IT service – it can be seen as a positive if professionals are managing your defenses.
So before you fill out that cyber insurance application, review your controls against this list. Shore up any gaps (better to delay application by a month to implement MFA than to rush in insecure). The payoff: you’ll not only meet the cyber insurance requirements to qualify for coverage but also drastically improve your odds of never having to use it.
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Sources For Cyber Insurance Requirements
These expectations for cyber insurance requirements are drawn from direct insurance industry data and guidelines. Coalition Insurance’s “Cyber Insurance Checklist” emphasizes MFA, backups, EDR, training as core requirements[14][5][8].
A 2023 report by Risk Strategies noted big premium discounts for firms with strong controls and big hikes for those without. Symquest’s analysis highlights the stat that 51% of policies mandate MFA and that failing basic requirements leads to claim denials. Marsh and Munich Re’s market reports similarly show a tightening of underwriting standards – with security posture directly affecting insurability and rates.
In short, what underwriters want is mirroring what cybersecurity pros have advised all along: robust basic controls. Align your with those expectations, and you’ll be both insurable and far safer from cyber incidents.
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About the Author
Niko Zivanovich is a Cybersecurity Leader with experience in helping organizations understand and achieve a more complete security posture. He is a co-owner of Cinch IT of Denver and has been working at Pellera Technology Solutions for 6 years, most recently as the Director of Cyber Defense and Threat Intelligence. Niko specializes in CISO advising, netsec ops, incident response, pen testing, and threat intelligence research. He holds multiple certifications through the SANS GIAC organization and is a Board Director for the InfraGard Colorado and Wyoming Chapter.
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