👋 Welcome to This Week’s Issue
This week, we’re diving into why cyber insurance has shifted from reactive coverage to proactive enforcement and what it means for IT leaders, SMBs, and enterprises navigating this new reality.
A few years ago cyber insurance was something only the big companies considered. For many small and midsized businesses it was a “nice to have” safety net. Fast forward to today and cyber insurance is a frontline defense against financial disaster.
It hasn’t been voluntary. Ransomware demands are setting records, supply chain attacks are spreading across industries and insurers are paying out big. According to Marsh’s Global Insurance Market Index, cyber premiums have risen double digits every quarter since 2019. For businesses that means higher costs and more requirements.
Let’s break it down.
🔄 The Changing Landscape of Cyber Insurance
Historically, businesses treated cyber insurance like fire insurance: protection in case of disaster. But the surge in successful ransomware campaigns and state-sponsored attacks has flipped that model. Insurers are no longer content to simply write checks after a breach. Instead, they want proof that organizations are taking basic precautions.
Among the most common requirements now being written into policies:
Multi-Factor Authentication (MFA): Insurers increasingly view MFA as the single most effective control. The Microsoft Security Blog notes MFA can block 99.9% of account compromise attempts.
Endpoint Detection & Response (EDR): Crowdstrike highlights EDR as essential for identifying and responding to advanced threats that slip past traditional antivirus tools.
Data Backups: Insurers want to see that backups are encrypted, offline, and regularly tested. The CISA Ransomware Guide highlights secure backups as one of the top defenses.
Incident Response Plans: According to IBM’s Cost of a Data Breach Report 2024, organizations with tested incident response plans save an average of $2.66 million per breach.
This evolution reflects a larger trend: insurers are dictating not only financial terms but also baseline cybersecurity maturity.
💸 The Cost of Inaction
The numbers speak for themselves. Global ransomware costs are projected to hit $265 billion annually by 2031 (Cybersecurity Ventures). Insurers, overwhelmed by claims, have raised premiums by as much as 50% year-over-year for high-risk industries.
For businesses, failing to meet requirements can mean:
Skyrocketing premiums that strain budgets
Coverage gaps where critical risks are excluded
Policy denial for companies without basic safeguards like MFA
SMBs face an especially steep hill. According to Verizon’s DBIR 2024, nearly half of breaches now target small organizations. Yet many SMBs lack the resources for enterprise-grade defenses. This leaves them more vulnerable — and less insurable.
That’s why partnerships between insurers and cybersecurity vendors are growing. In some cases, insurers will even subsidize security tools, knowing that prevention is cheaper than payouts.
(For background on stronger authentication methods that reduce breach risk, see Everykey’s blog on Passkeys Explained.)
🏛️ Regulatory Pressures and Insurance
Cyber insurance doesn’t exist in a vacuum — regulators are tightening disclosure and resilience standards worldwide.
In the U.S., the SEC’s cybersecurity disclosure rules now require public companies to disclose material cyber incidents within four business days, raising the stakes for insurers evaluating risk.
In Europe, the NIS2 Directive and the Digital Operational Resilience Act (DORA) push stricter requirements for financial institutions to maintain security controls, resilience testing, and breach reporting.
Regulators are signaling that transparency and resilience aren’t optional — they’re becoming baseline expectations.
For insurers, this means aligning coverage with regulatory compliance, or risk payouts being denied.
🤝 Cyber Insurance as a Partnership Model
The market is shifting from a simple safety net to a collaborative model where insurers actively help reduce risk:
Providers like Coalition bundle insurance with threat intelligence, monitoring, and incident response services — blurring the line between coverage and managed security.
Many insurers now subsidize phishing-resistance training or offer discounts for companies that adopt frameworks like zero trust or passwordless authentication.
This partnership approach benefits everyone: businesses improve defenses, insurers face fewer payouts, and attackers find fewer easy targets.
Cyber insurance is no longer just about paying claims — it’s about building resilience together.
📊 Case Study: Insurance Meets Security
To bridge the gap, insurers are experimenting with tying policies directly to security practices. One model offers policy discounts for companies that implement passwordless MFA, advanced endpoint monitoring, or phishing-resistant credentials.
The rationale is clear: better defenses equal fewer claims. For example:
Coalition offers active monitoring services bundled with policies.
Some carriers reduce premiums if organizations complete phishing-resistance training or adopt NIST-aligned controls.
This alignment transforms insurance from a backstop into an active enforcer of resilience. It also sets a precedent: insurers aren’t just financial partners anymore — they’re shaping technical strategies.
(Everykey has participated in similar partnerships, where passwordless MFA not only reduces claims exposure but also makes coverage more accessible for SMBs. See our guide on Introduction to Authentication.)
🔮 Looking Ahead: Will Cyber Insurance Become Mandatory?
The next question is whether cyber insurance could eventually become mandatory for certain industries. Just as auto insurance is required for drivers, governments may see cyber insurance as essential for protecting critical infrastructure and supply chains.
Some experts argue this is already on the horizon. The U.S. Government Accountability Office has raised questions about whether mandatory coverage could help stabilize the insurance market. In the EU, policymakers are exploring similar mandates as part of broader cyber resilience regulation.
Even if mandates don’t arrive soon, the trajectory is clear: cyber insurance is becoming more tightly coupled with security. Carriers will continue to expand their influence, sometimes requiring — and even delivering — the tools businesses must deploy to qualify.
💡 Unlocked Tip of the Week
When evaluating a cyber insurance policy, don’t just look at the premium. Carefully review the security requirements tied to coverage. Meeting those standards doesn’t just protect your eligibility for claims — it lowers your breach risk and strengthens your resilience.
For SMBs, this may also be the push needed to adopt modern security practices you’ve been postponing.
🙋 Author Spotlight
Meet Ahmad Al Hidiq - Chief Technology Officer
Ahmad Al Hidiq is a tech entrepreneur, venture builder, and cybersecurity leader with a knack for turning bold ideas into thriving companies. With 20+ years of experience, two successful exits, and over 50 startups launched through his venture studio, LabEight* Ventures, Ahmad has worn just about every hat — sales leader, engineer, marketer, strategist, and executive.
Today, as CTO of Everykey, and with his focus on innovation, he’s leading the charge in shaping the company’s next chapter, including pioneering new enterprise access management solutions built on proximity-based, passwordless security. Beyond building products and scaling companies, Ahmad loves mentoring founders worldwide, diving into emerging technologies, and chasing the next big idea.
✅ Wrapping Up
Cyber insurance is a new era of shared responsibility. Insurers, businesses and tech providers are all aligned on one goal: reduce risk at the source, not just pay for the aftermath.
For IT leaders the message is clear: cyber insurance is no longer a passive financial product. It’s an active driver of cybersecurity maturity. Meeting insurer requirements not only makes you more insurable — it raises the bar for your whole organization.
Be resilient. Be compliant. And remember: the stronger your defenses, the lower your costs.
Till next time,