Cyber Insurance Alone Won’t Protect Your Business

A mid-sized financial services firm suffered a data breach that exposed thousands of sensitive client records. Confident in their cyber insurance coverage, the firm filed a claim, expecting financial relief. Instead, the insurer denied the claim due to the following deficiencies: 

• No recent cyber security risk assessment had been conducted. 
• The most recent penetration test was outdated, leaving critical vulnerabilities unaddressed. 
• The firm lacked a structured incident response plan, delaying containment and mitigation efforts. 

As a result, the organization bore the full cost of legal expenses, regulatory fines, and reputational damage. This scenario is becoming increasingly common as insurers scrutinize policyholders' cyber security practices. 

Cyber insurance policies are not blanket guarantees. Insurers assess whether organizations have taken adequate precautions to minimize risk before approving claims. The most common reasons for claim denials include: 

• Lack of cyber security risk assessments – Without regular assessments, businesses may be deemed negligent in identifying and addressing security gaps. 
• Failure to conduct penetration testing – Insurers expect organizations to proactively test and reinforce their defenses against evolving threats. 
• Absence of an incident response plan – A slow or disorganized response to an attack can lead to increased financial and operational damage, raising concerns for insurers.
• Insufficient employee cyber security awareness – Social engineering and phishing attacks remain among the leading causes of breaches, and insurers may deny claims if businesses fail to provide adequate training. 

Organizations that implement robust cyber security frameworks are far more likely to have their claims approved. The following measures can help demonstrate due diligence and strengthen an organization’s position with insurers: 

Cyber security Risk Assessments 

A comprehensive risk assessment provides a clear understanding of an organization’s security posture, identifying vulnerabilities before they can be exploited. Insurers view regular assessments as a fundamental component of proactive cyber security management. 

Penetration & Network Testing 

Simulating real-world cyberattacks through penetration and network testing helps organizations uncover weaknesses in their networks, applications, and employee security awareness. Routine testing not only reduces the risk of a breach but also provides insurers with evidence of an organization's commitment to security. 

Threat Intelligence, Data Recovery & Dark Web Monitoring 

Cybercriminals frequently trade stolen credentials and other sensitive data on the dark web. Proactive monitoring of compromised information helps organizations prevent breaches and strengthens their ability to demonstrate security vigilance to insurers. 

At Crowe BGK, we provide organizations with the expertise and tools needed to enhance cyber security resilience and align with insurance requirements. Our services include: