It’s a dangerous world out there, and that is why more companies are investing in cybersecurity insurance to protect themselves against threats from data breaches, phishing attacks, identity theft, malware and ransomware. Cyber policies insure their holders against losses from direct data breaches and network attacks, or from liability due to attacks which compromise third-party data.

Cyber insurance serves as a valuable instrument to effectively transfer business risk – but only if policyholders can demonstrate effective security controls and IT resilience to support their claims when the time comes. Those who do not follow their policy terms of agreement for network safeguards may find their claims rejected – and they will have to shoulder the full cost of a breach or other cybersecurity incident. 

Coverage depends on meeting certain requirements set out in each policy, and failure to meet those specific requirements can lead to application denials, higher premiums, or even to costly claims denials. The insurer requirements address a range of concerns involving network security controls, vulnerability assessments, endpoint protection, patch management, and identity and access management. Other aspects of cyber insurance focus on disaster recovery and incident response plans for IT organizations, and security awareness training programs for employees. Such periodic trainings keep the workforce updated about the latest human threats from social engineering attacks, and how to defend themselves by recognizing suspicious messages. 

The rise of the hybrid workforce and mobile computing has only increased the threat level for IT and security teams, as network attack surfaces have continued to expand with the addition of each new online device and cloud application. As the rate of complexity accelerates, it becomes even more critical to read and follow the fine print in cyber insurance contracts.

Policyholders are responsible for accurately reflecting all the information about network devices and security protocols that are represented in their policies. If an organization has misrepresented what assets are managed on its network, or it cannot give a clear assessment of user authentication procedures, then certain claims are likely to be denied. 

Another main reason that cybersecurity claims are denied stems from a lack of necessary security controls, or misstating the level of security controls that are in place at the time of a breach. For instance, insurance claims may be denied in cases where the policy clearly states that multifactor authentication (MFA) is required to protect digital assets, yet no MFA systems can be verified. 

There are also “excluded events,” which involve the kinds of underlying situations that are – and are not – covered by cyber insurance policies. In some cases, losses will not be covered if they can be attributed to an act of war carried out by a nation-state, in which case any liability may attach to the U.S. national security apparatus, not the insurer.

Gaining IT visibility can reduce the threat of cyber exposure

If security leaders cannot identify harmful conditions related to security vulnerabilities on an IT network, there is no way to mitigate the problem. That is where network monitoring and management automation can provide needed visibility to certify defensible cyber insurance policy claims.

Over the past year, the process for organizations to obtain comprehensive cyber insurance coverage took longer and cost more as insurers sought to reduce their exposure to avoidable and uncontrollable circumstances, according to Delinea’s 2023 State of Cyber Insurance report. As a result, the report described a “cyber insurance gap” in which organizations did not pay adequate attention to the details of their cyber insurance policies. Many just wanted to obtain some proof of coverage, without closely reviewing how their policy terms had changed upon renewal. 

More than two-thirds of survey respondents (67%) reported that their insurance rates had increased by 50% to 100% upon policy application or renewal. Additionally, the report found that insurers were adding to their list of exclusions to make cyber insurance coverage void. Such exceptions included a lack of adequate security protocols (for 43% of respondents), human errors (38%), acts of war (33%), and not following proper compliance procedures (33%). 

On a positive note, more organizations reported investments in cybersecurity solutions to meet the growing requirements for cyber insurance. As a result, 81% of respondents received the budget needed for their cyber insurance policies, and more than two-thirds of respondents (36%) noted that their Boards of Directors and executive management teams were requiring cyber insurance protections. 

Again, it is a bedrock rule of security that no one cannot protect what they cannot see. A lack of visibility can result in catastrophic breaches that lead to huge financial losses and lasting harm to a brand reputation. Systematic network monitoring is a part of the solution, not only by identifying performance problems related to breaches and account takeovers, but also by storing useful data to meet cyber policy requirements for network management and security.

Cyber insurance requirements help to incentivize security best practices that organizations should be doing anyways. But when that unexpected time comes to utilize the financial safety net of a cyber insurance policy, it pays to have systems in place for effective network transparency to support and validate any claims for compensation.

https://www.securitymagazine.com/articles/100764-enhancing-cyber-insurance-value-with-network-visibility