Cyber insurance is often treated as a safety net, something that sits quietly in the background, ready to absorb the financial impact if the worst happens. Many organisations assume that once a policy is in place, they are protected by default. In reality, cyber insurance does not work that way.
Insurers increasingly assess not just whether you have been breached, but whether you had the right controls in place before the incident occurred. Claims are frequently reduced or denied when insurers determine that basic security requirements were missing, poorly implemented, or misrepresented during underwriting. Understanding what cyber insurers actually expect is now a core part of cybersecurity readiness, not an optional extra.
Why Cyber Insurance Claims Are Often Disputed
Cyber insurance claims are rarely denied because an attack did not happen. They are disputed because of control gaps. According to the UK Government’s Cyber Security Breaches Survey, organisations that lack fundamental controls are significantly more likely to experience disruptive incidents and prolonged recovery times.
Insurers use similar indicators when assessing claims. If a breach occurs and the investigation shows that expected safeguards were missing, insurers may argue that the risk profile disclosed at policy inception no longer applied.
What Insurers Actually Assess
Many organisations believe insurers mainly care about antivirus software or firewalls. In practice, underwriting and claims teams focus on four core areas:
- Identity and access control
- Data protection and backups
- Incident detection and response
- Governance and policy enforcement
These expectations are consistent across major insurers and align closely with guidance from the UK National Cyber Security Centre (NCSC).
1. Identity and Access Control
The Verizon 2024 Data Breach Investigations Report shows that stolen credentials and phishing remain the leading causes of breaches, as a result, insurers increasingly expect:
- Multi-Factor Authentication (MFA) on:
- Email accounts
- Remote access (VPN, cloud platforms)
- Administrative and privileged accounts
- Least-privilege access
- Separation of admin and user accounts
The UK NCSC explicitly lists MFA as a baseline control, particularly for cloud services and remote access.
2. Backup Strategy and Data Resilience
Ransomware has changed how insurers view backups. It is no longer enough to say “we have backups.” Insurers typically expect:
- Regular, automated backups
- Offline or immutable backups
- Documented restoration testing
The NCSC advises that backups should be protected from ransomware by design, not just by policy. From an insurance perspective, if data could not be restored due to poorly secured backups, the financial impact of the incident increases and so does scrutiny of the claim.
3. Endpoint and Patch Management
While endpoint protection alone is no longer sufficient, insurers still expect:
- Supported operating systems
- Timely security patching
- Endpoint protection on user devices
- Central visibility over device status
Unpatched vulnerabilities remain a common breach vector. The UK Government’s Active Cyber Defence programme has repeatedly highlighted how basic patching prevents a large percentage of opportunistic attacks.
4. Incident Detection and Response Readiness
Isurers are not only interested in if you were breached, but how quickly you noticed and responded. They increasingly expect:
- Centralised logging or monitoring
- Defined incident response procedures
- Clear escalation paths
- Evidence that staff know how to report incidents
The NCSC’s incident management guidance emphasises that early detection significantly reduces breach impact and recovery cost.
5. Security Policies and Governance
Cyber insurance is not purely technical. Insurers also assess governance maturity. This includes:
- Written security policies
- Acceptable use policies
- Backup and access policies
- Evidence that policies are communicated and enforced
The ICO has made it clear that governance failures frequently underpin data breaches, even when technical controls exist.
Common Reasons Cyber Insurance Claims Are Reduced or Denied
Across the industry, recurring issues include:
- MFA not enabled despite being declared
- Backups accessible to ransomware
- Unsupported or end-of-life systems
- No evidence of incident response procedures
- Inconsistent security controls across the organisation
These are not edge cases, they are routine findings.
How to Assess Your Readiness Before a Claim Tests It
The safest time to discover gaps is before an incident. A structured security readiness or compliance review typically evaluates:
- Whether controls match insurer expectations
- Where documentation does not reflect reality
- Which gaps represent claim risk, not just cyber risk
- How quickly improvements can be made
This approach aligns with NCSC guidance on proportionate, risk-based security for organisations of all sizes.
Conclusion
Cyber insurance is not a substitute for cybersecurity, it is a validation of it. Insurers expect organisations to demonstrate:
- Control over identities
- Resilience of data
- Visibility into incidents
- Basic governance maturity
Policies pay out when risk is managed, not ignored. Understanding what insurers actually expect allows organisations to reduce both breach impact and claim risk, turning insurance into a genuine safety net rather than a false sense of security.
At I-Net Software Solutions, we help organisations assess whether their cybersecurity controls align with real insurer expectations, not assumptions.
Our Cyber Insurance Readiness & Compliance Review helps you:
- Identify gaps that could invalidate a claim
- Align controls with insurer and NCSC guidance
- Strengthen evidence of due diligence
- Reduce risk before renewal or incident
If your policy was ever tested, would it stand up to scrutiny?