Cyber Insurance Requirements - How to qualify for cyber insurance using robust cyber security controls?

Cyber Insurance Requirements Explained

Written by Ryan Nevin


Understand the minimum cyber insurance requirements that insurers will expect your business to implement to help mitigate the risk

Cyber insurance is a specialised product designed to help companies manage the financial risks associated with cyber threats and data breaches. This type of insurance provides coverage for various cyber-related incidents, such as data breaches, network security failures, and cyber extortion. 

Cyber insurance policies typically cover costs related to data recovery, legal fees, notification of affected parties, public relations efforts, and business interruption. By transferring some of the financial risks associated with cyber incidents to the insurer, organisations can better protect themselves against the potentially devastating impacts of cyber attacks and data breaches.

The role of cybersecurity requirements in insurance

Insurers require cybersecurity controls to ensure that organisations have taken necessary steps to mitigate cyber risks. These controls help reduce the likelihood and severity of cyber incidents, thereby minimising potential claims and financial losses for both the insurer and the insured. By implementing robust cyber security measures, organisations demonstrate due diligence and a proactive approach to managing their cyber risks. Ultimately, these controls align the interests of insurers and organisations in preventing and effectively responding to cyber threats.

Measures such as firewalls, antivirus software, and multi-factor authentication help prevent unauthorised access and malware infections. Regular software updates and patch management address vulnerabilities before they can be exploited. Access controls and network segmentation limit the spread of attacks within an organisation. Incident response plans and data backups ensure quick recovery and minimise damage from cyber incidents. By reducing the likelihood and impact of cyber threats, these controls lower the frequency and severity of insurance claims, benefiting both insurers and organisations.

Insurers use a variety of assessment procedures to evaluate an organisation's cybersecurity posture before issuing a cyber insurance policy. These assessments may include a non-intrusive scan of your domains to help determine the level of risk and appropriate cyber coverage. Key assessments can include risk assessments, security audits, training programs and security policies.

Essential cybersecurity controls required for cyber insurance

Cyber insurance requirements can include a range of components, from simple forms of multi-factor authentication to regular software updates and patches. Below you will find an outline of these cyber essentials that will improve your eligibility for cyber insurance, all while mitigating against your levels of cyber risk.

Firewalls and Intrusion Detection/Prevention Systems

Firewalls are security devices or software applications that monitor and control the incoming and outgoing network traffic based on predetermined security rules. They act as a barrier between trusted internal networks and untrusted external networks. Firewalls use traffic filtering alongside threat prevention and access controls to maintain a safe network. Insurers consider firewalls to be a massive part of risk mitigation as well as being essential to ensuring compliance with many regulatory frameworks. 

Intrusion Detection Systems (IDS) and Intrusion Prevention Systems (IPS) are security tools designed to detect and respond to potential security breaches or attacks on a network. IDS monitors network traffic for suspicious activity and alerts administrators, while IPS takes proactive steps to block or prevent the detected threats. These systems are vital to ensure stringent levels of threat detection, while many IPS can take steps to prevent malicious activity. Most insurers will insist on the presence of such systems, to protect your network from outside threats.

Anti-virus and Anti-malware Software

Anti-virus and anti-malware software are security programs designed to detect, prevent, and remove malicious software (malware) from computers and networks. These tools protect against a wide range of threats, including viruses, worms, Trojans, ransomware, spyware, and adware.

This cybersecurity software provide high levels of threat detection by scanning files and system activities for known malware signatures and behaviours. They are also able to block malicious software installation, while repairing infected files and systems. Many solutions offer continuous monitoring of systems for suspicious activity and immediate threat response.

Insurers require this type of cybersecurity software to provide comprehensive coverage, while it is important to keep such measures updated at all times. Many insurers will also require automated and scheduled scanning, with integration with other tools such as IDS/IPS providing a layered defence strategy.

Data Encryption

Data encryption is a process that transforms readable data (plaintext) into an unreadable format (ciphertext) using cryptographic algorithms and keys. This process ensures that only authorised parties with the correct decryption key can access and read the data.

Measures such as data encryption ensure confidentiality by preventing data breaches, maintaining data integrity. Compliance with data protection and regulatory standards such as GDPR can also be protected by data encryption. Data will remain secure both at rest and in transit while data encryption is in use.

Insurers have high standards for data encryption procedures with a focus on using industry-standard encryption algorithms to ensure data security. End-to-end encryption is often mandated by insurers to keep data secure throughout its lifecycle. Key management practices must be in place, including secure generation, storage and encryption key rotation. There is an expectation from insurers that organisations will have clear policies with regards to data encryption, while regular audits and assessments will ensure ongoing compliance.

Multi-Factor Authentication (MFA)

Multi-Factor Authentication (MFA) is a security system that requires multiple forms of verification to authenticate a user's identity. It enhances security by requiring users to present a combination of two or more independent credentials from different categories of authentication factors. These can refer to a secure password or PIN. Biometric verification in the forms of fingerprints, facial recognition or retinal scans.

These forms of authentication provide a layered level of protection to reduce the likelihood of unauthorised system access. MFA ensures mitigation with regards to phishing scams and stolen credentials, since possession of a password alone will no longer be enough to access secure systems.

Insurer standards with regards to MFA include mandatory use for sensitive systems, with an expectation that it will be implemented to restrict access to data and systems. There should be a broad application of such security, with organisation-wide implementation, as well as regular updates and reviews to such systems. Training and awareness programs should be available, while integration with other security measures can improve overall levels of data protection.

Regular Software Updates and Patch Management

Software updates and regular patches exponentially increase levels of cyber security. Updates often include patched for undiscovered vulnerabilities, helping to prevent breaches. Many regulatory standards require organisations to maintain up-to-date software to ensure the security of sensitive data.

The risks associated with unpatched software are vast, starting with the exploitation of known security flaws, which can allow malicious parties access to sensitive data. Earlier versions of systems typically provide easier access for data breaches and attacks. This can lead to operational disruption or outages as well as data corruption, all of which can be both costly and damaging to your operations.

Insurers have an expectation that there will be regular software updates with timely application of critical patches to minimise the window of exposure to known vulnerabilities. Automated patch management systems are favoured by insurers due to the added layer of consistency they provide. Thorough documentation and reporting on all patches ensure effective application, while testing and rollback plans create procedures for patches pre-deployment.

Access Controls

Access controls refer to security measures that regulate who or what can view or use data within a system. One of the key principes of cyber security is that of least privilege. This references the idea that access rights to data should be kept to the minimum number of persons who require access to carry out their duties. This minimises risk by restricting data access as much as possible while protecting sensitive information. This also enables organisations to enhance accountability, potentially aiding in any forensic investigations where necessary.

Types of access controls can be physical, referring to access cards or biometric scanners restricting access to data centres. Logical access controls such as user authentication, role-based access control and attribute-based access control can also be used to mitigate risk. Network access controls such as firewalls, VPNs and network segmentation can also be used to enhance network security.

Insurers will expect implementation of strict authentication mechanisms as well as adherence to the principle of least privilege. Regular access reviews and audits will ensure that all permissions are still necessary while notifying the organisation of any unauthorised access. Comprehensive policies in this area will guarantee compliance with best practices.

Data Backup and Recovery

Regular data backups are crucial for protecting an organisation’s data against loss due to cyber attacks, hardware failures, accidental deletions, or natural disasters. Backups ensure that an organisation can quickly restore its data and resume operations with minimal disruption.

Having a robust recovery plan is essential to data security. Risk assessments and business impact analysis will identify potential risks, offering an opportunity to mitigate. Having recovery objectives centred on time and data loss allowances can also help achieve a more secure environment. Backup strategies and data restoration procedures can work alongside vigorous testing and maintenance are vital in preparation for any potential problems.

Insurers will look for regular backups and off-site storage, either through cloud systems or a secondary backup location. Encryption and security, alongside a documented recovery plan will show insurers that an organisation is serious about data security.

For cloud and managed service providers, it is commonly required for backup data to be stored at two separate data centres, that one backup of the data is immutable, and that you prevent anyone user account from accessing both backed up instances to modify or delete any of the backed up data.

Security Awareness Training

Security awareness training refers to educational programs designed to inform and train employees about the importance of cyber security, common cyber threats and best practices for protecting sensitive data. The aim is to equip staff with the knowledge and skills required to recognise and respond to security threats.

The importance of preventing human error-related breaches cannot be understated. Training will increase risk awareness, while driving behavioural change in the methods of data handling. Training schemes can drastically reduce vulnerabilities, especially when it comes to the mishandling of sensitive or personally identifiable information. These are sometimes required to remain compliant with the insurer’s minimum cybersecurity requirements.

Incident Response Plans

An incident response plan is a structured approach outlining the procedures and actions to be taken when responding to a cyber incident. It aims to manage and mitigate the impact of security breaches, ensuring a swift and effective resolution to minimise damage.

Most cyber insurance policies will provide access to cybersecurity specialists that understand what to do next to minimise the damage of a cyber event. Identification of an incident followed up by swift eradication of any threats and root causes would set the organisation up for rapid recovery. Thorough documentation of the incident after the fact, noting the lessons learned can act as a preventative measure for any future incidents.

Cyber insurers will expect comprehensive documentation of any incident that has occurred, while regular testing and drills will reduce the likelihood of future incidents. Timely detection and reporting alongside a proven willingness for continuous improvement will show insurers that everything possible is being done to prevent future incidents.

Network Segmentation

Network segmentation involves dividing a computer network into smaller, isolated segments or subnetworks. Each segment functions as a separate entity with its own set of security controls, limiting the spread of cyber threats within the organisation. Types of network segmentation can include physical segmentation, VLANs, micro-segmentation and network access control.

These methods of segmentation can aid with containment of breaches, enhancing the organisation’s security across the wider business. Access controls become stricter by limiting an individual’s access to only the necessary segments to carry out their roles. Segmentation can also allow for more focused monitoring and logging of network traffic within each segment.

Insurers will expect effective implementation of these types of segmentation, with tailored security policies ensuring maximum protection for each segment. Regular auditing and reviews alongside incident response integration will show insurers that the organisation takes their levels of cyber security seriously.

Regulations and compliance

Regulations such as GDPR (General Data Protection Regulation) impose stringent requirements on how organisations handle and protect personal and sensitive data. There is a legal obligation to adhere to these regulations, as well as ensuring a high-level of data protection. Strict adherence to these policies is also beneficial to the reputation of an organisation. There is a requirement to keep consistent and up-to-date records regarding cybersecurity, with an emphasis on robust policies.

Compliance with the above cybersecurity controls will have a large impact on both the eligibility for cyber insurance, as well as the calculation of premiums involved in a policy:

Risk Assessment – Insurers will assess the risk profile of an organisation during their underwriting process. Demonstrating compliance with regulations indicates lower risk, making the organisation more eligible for coverage. This can also lead to lower premiums, as insurers will view compliant organisations as less likely to experience breaches and the associated claims.

Claims Processing – Comprehensive documentation of cybersecurity policies and procedures helps to validate claims and ensures there is necessary evidence of due diligence and proactive risk management.

Regulatory Fines Coverage – Some policies may cover fines and penalties resulting from regulatory non-compliance. Demonstrating proactive compliance can make it easier to obtain such coverage

Continuous Improvement – Ongoing compliance efforts and documentation demonstrate a commitment to continuous improvement in cybersecurity practices, which insurers value when assessing risk and setting premiums.

As outlined in these cyber insurance requirements, by maintaining cybersecurity controls and ensuring compliance with regulations like GDPR, organisations can enhance their security posture, reduce risks, and potentially lower their insurance premiums, while also ensuring eligibility for comprehensive cyber insurance coverage.


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About the author

Ryan Nevin is an Account Broker at Get Indemnity™ - he is an ambitious professional who is currently studdying towards being a Chartered Insurance Broker.