Cyber insurance has become a source of growing frustration for many companies. Applications are longer. Questions are more detailed. Renewals take more time. Coverage terms feel narrower than they used to. It’s easy to conclude that insurers have simply become more difficult to deal with or that the market has turned hostile generally.
That interpretation is understandable but incomplete.
What has changed is not merely the tone of underwriting, but its purpose. Cyber insurance is no longer assessed as a straightforward mechanism for transferring loss. It is increasingly evaluated as evidence of how an organization governs risk in practice. Insurers are becoming more demanding not out of caprice, but because loss experience has clarified which behaviors, controls, and decisions actually correlate with resilience.
Why Cyber Insurance Matters More Than It Used To
A decade ago, cyber insurance was often treated as an optional add-on, mainly because cyber incidents were generally framed as episodic technical failures. Breaches happened, but they were treated as exceptional events with bounded cleanup costs. Cyber insurance was intended to cover things like notifications, forensics, and certain legal fees. The financial exposure was real, but it was usually survivable and, significantly, non-recurring.
Many organizations treated cyber insurance as a way to absorb the financial impact of risks that were difficult to eliminate operationally. The implicit belief was that once coverage was in place, the exposure had been adequately contained, even if the underlying controls were imperfect. In other words, insurance was often viewed as a clean transfer of cyber risk: meet the requirements, pay the premium, and move the problem off the balance sheet.
That framing worked reasonably well when incidents were less frequent and loss data was thin on the ground. Oh, how things have changed.
Today, cyber incidents behave less like accidents and more like operational risks. Business interruptions last longer. Ransom demands scale with revenue. Regulatory penalties and—significantly—litigation have become more common and more expensive. Losses compound across multiple categories at once.
From a finance perspective, that changes everything. When losses are:
- repeatable rather than exceptional,
- correlated across industries rather than isolated,
- and large enough to affect earnings, cash flow, or borrowing terms,
They stop looking like mere IT problems and start looking like enterprise risk. At the same time, customers, lenders, and partners are more likely to ask whether coverage exists and under what conditions.
As a result, cyber insurance has shifted from a theoretical backstop to a materially relevant signal of how seriously an organization takes its risk exposure. That shift helps explain why insurers are paying closer attention. They’ve learned the hard way. So, too, have regulators, boards, and plaintiffs’ attorneys.
What Insurers Are Really Asking For
The length and specificity of modern cyber insurance applications are not arbitrary. Nor are they intentionally hostile; however, it may feel like a punishment to slog through them. Applications reflect a shift away from abstract assurances toward operational reality.
Insurers are probing how identity and access are governed, whether multifactor authentication is consistently enforced, how backups are protected and tested, how third-party risk is managed, and how quickly incidents can be detected and contained. These questions exist because loss data has shown, repeatedly, where breakdowns tend to occur. Alas, too many organizations still approach these questions as compliance exercises, rather than as signals about how risk is being evaluated.
It’s important to understand, however, that insurers are not expecting perfection. What they are looking for is evidence of discipline: clear ownership, consistent enforcement, and the ability to demonstrate that controls operate the way leadership believes they do.
This can feel intrusive, especially for organizations accustomed to passing audits with just standardized documentation. But from an underwriting perspective, it is a rational response to patterns of failure seen across the market.
When “Meeting the Requirements” Isn’t the Point
Another quiet assumption in too many C-suites is that there is a fixed bar for cyber insurance eligibility. Implement the right controls, check the right boxes, and coverage will follow. Right?
In practice, underwriting is comparative. Insurers assess relative risk across industries, peer groups, and portfolios. Two organizations can deploy similar technologies and receive very different outcomes based on how those technologies are governed, maintained, and monitored over time.
Cyber insurance rewards sustained risk management. An organization that can show consistent enforcement, documented exceptions, tested response plans, and leadership oversight will often be viewed differently from one that merely “has the tools.” This is why surprises at renewal are common. The environment changes. Threat patterns shift. Loss experience accumulates. Expectations evolve accordingly.
Insurance applications, exclusions, denials, and premium increases highlight where insurers are seeing repeated failure across the market. When organizations use that feedback to inform governance discussions, insurance becomes a valuable input. When they treat it as just another external hurdle, it becomes a recurring source of frustration.
Organizations that consistently secure better insurance outcomes tend to approach the process differently. They treat applications as internal diagnostics rather than paperwork. They align answers with operational truth and can defend them when asked. They focus on consistency and evidence instead of last-minute fixes. And they involve security and risk leadership early, rather than at renewal time.
None of this guarantees coverage. But it does change the conversation.
Leadership, Not Procurement
Cyber insurance often lands in procurement workflows, but its implications are squarely leadership-level. Coverage decisions affect financial exposure, regulatory posture, and board accountability. They also reflect judgments about which risks an organization is willing to retain.
Understanding why insurance is getting harder to obtain requires stepping back from individual questions and looking at the broader picture: how risk is governed, how decisions are made, and how consistently expectations are enforced across the organization.
As cyber insurance expectations continue to evolve, outcomes increasingly depend on whether an organization can stand behind its risk decisions with clarity, consistency, and evidence.
Explore more articles by Chris Moschovitis
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Strategic Agility: Why Co-Managed IT and Cybersecurity May be the Answer
I am certified in Cybersecurity (CSX, CISM), Enterprise IT Governance (CGEIT), Data Privacy Solutions Engineering (CDPSE), and as a Certified Information Privacy Professional (CIPP/US). I am also an active member of organizations including ISACA, IAPP, and ISSA. In 2018, my book Cybersecurity Program Development for Business: The Essential Planning Guide was published by Wiley to critical acclaim. My second book, Privacy, Regulations, and Cybersecurity: The Essential Planning Guide, received an equally positive reception upon its release by Wiley in 2021. Additionally, I co-authored History of the Internet: 1843 to the Present and contributed to the Encyclopedia of Computers and Computer History as well as the Encyclopedia of New Media.
