Cyber insurance has become a critical safeguard for organizations of all sizes—but understanding and securing the right policy is more complicated than ever.
In a recent conversation with James Sanborn, CIC, CRM, of Allen Insurance & Financial, we explored the evolving challenges businesses face when securing or renewing cyber insurance. James shared practical insights on why today's policies demand more than coverage—they require proof of cyber maturity.
As he put it: "It's no longer about just having insurance—it's about proving you've earned it.”
Here's what business leaders need to know to stay insurable and resilient in 2025 and beyond.
What's Shaping the Cyber Insurance Market in 2025?
Cyber insurance was once a relatively straightforward offering. Policies were limited in scope, premiums were based largely on revenue brackets, and underwriting involved answering just a handful of questions. That's no longer the case.
Today's cyber insurance is a highly scrutinized, data-driven product. Insurers have responded to a surge in cyber incidents—particularly following the rise in remote work stemming from the COVID-19 pandemic—by tightening eligibility, refining coverage definitions, and setting stricter requirements for underwriting.
The New Reality: Complexity, Customization, and Claims
Here's what business leaders need to know:
Policies Are Not Standardized
Unlike auto or homeowner's insurance, cyber liability policies are not built on a common template. Each insurer writes its own version, with varying definitions, exclusions, and coverage limits. This means:
- Comparing policies apples-to-apples is difficult without expert guidance.
- What's covered under one policy may be excluded in another.
- You must read (or have a broker read) the fine print—especially around breach response, ransomware, and third-party liability.
Underwriting is Deep and Technical
Gone are the days of “three questions and done.” Carriers now require detailed technical disclosures to assess your cyber hygiene. At a minimum, insurers expect:
- Up-to-date firewalls and antivirus software
- A formal patch management process
- Encrypted and regularly tested backups
- Multifactor authentication (MFA), a non-negotiable
If you don't have these controls in place, coverage may be denied—or offered with higher premiums, lower limits, and restrictive terms.
Additional security investments can pay off for organizations aiming for more favorable coverage and pricing. Enhanced underwriting responses that demonstrate:
- Endpoint detection and response (EDR)
- Incident response and disaster recovery plans
- Vendor risk management
- Role-based access controls
- Penetration testing, and
- Employee security awareness training programs
…can position your business for higher policy limits, lower retention amounts (i.e., deductibles), and shorter waiting periods for business income coverage.
Claims Are Under the Microscope
With rising claim volumes, insurers are enforcing policy terms more strictly. Ambiguity in underwriting responses can lead to rescinded coverage and denied claims. Policies could be voided after a breach if it is revealed that a security measure wasn't properly implemented despite a "Yes" answer on the application.
To protect your coverage:
- Engage your IT provider in completing questionnaires
- Provide written narratives when "yes/no" answers are insufficient
- Avoid misrepresentations—even unintentional ones
Insurers have every right to deny a claim if they determine they wouldn't have written the policy had they known the whole story.
Common Coverage Areas in Modern Cyber Policies
While policies differ, most modern cyber policies include the following categories of protection:
- Breach Response Costs: Notification, credit monitoring, PR support
- Cyber Extortion/Ransomware: Negotiation, payment, and system restoration
- Business Interruption: Loss of income due to a cyber event
- Data Restoration: Recovering corrupted or deleted data
- Regulatory Fines & Legal Defense: Coverage for proceedings and penalties
- Social Engineering & Fraud: Funds transfer fraud, impersonation, telecom fraud
- Reputational Harm: Potential financial impact from lost trust
- Betterment: Partial reimbursement for improving systems after a breach
What’s Driving Premiums and Policy Limits?
Insurers now price risk based on more than just industry and revenue. Factors include:
- Number and type of sensitive records stored
- Prior claims history
- Use of critical third-party vendors
- Geographic regulatory exposure (e.g., operating in California or New York)
- Your IT maturity and ability to recover from an incident
While $1 million in coverage is often a starting point, many businesses—especially those with higher revenue, compliance-driven, or healthcare exposure—are increasingly securing $5M–$10M policies. Expect starting premiums in the range of $3,000–$7,000 annually for base coverage, with the potential for a 40% credit or debit based on underwriting.
The Role of IT Service Providers in Cyber Insurance
Managed IT providers are playing a growing role in helping clients navigate this landscape. In fact, many insurers now require clients to confirm that their IT provider was involved in completing the renewal application.
Your IT partner should be prepared to help:
- Ensure technical controls (like MFA and EDR) are fully implemented
- Support questionnaire responses
- Provide documentation of response plans, backup strategies, and vendor assessments
Working with your IT partner not only ensures accuracy—it also helps you tell a more complete “cyber risk story” to underwriters.
What's Next?
While insurers, regulators, and businesses are all still figuring out how to respond to emerging threats—such as artificial intelligence misuse, evolving ransomware tactics, and changing state laws—the trajectory is clear: expectations are rising.
Cyber insurance is now a business essential. But securing and maintaining coverage requires proactive risk management, close coordination between IT and leadership, and a clear understanding of what's really in your policy.
Is Your Cybersecurity Strategy Aligned with Insurance Expectations?
At Systems Engineering, we actively work with clients to shape their technology and cybersecurity strategies, ensuring that cyber risk is addressed not just operationally but in ways that support insurability.
Our approach aligns cybersecurity programs to recognized frameworks such as the NIST Cybersecurity Framework, enabling organizations to demonstrate maturity, preparedness, and control when applying for or renewing cyber insurance policies.
The result is more than technical readiness—it's a clear, defensible cybersecurity strategy that meets evolving insurer expectations and supports business resilience.
Contact us today to start building a strategy that strengthens your security posture and positions you for successful cyber insurance renewal.
GUEST CONTRIBUTOR
James Sanborn, CIC, CRM
Producer, Allen Insurance & Financial
James Sanborn is an accomplished insurance professional with 30+ years of experience. At Allen Insurance & Financial, he specializes in commercial insurance and risk management, focusing on complex coverage areas such as cyber liability, property and casualty, and industry-specific programs.
