Cyber insurance—often called cyber liability insurance—has moved from a niche product to a core part of enterprise risk management. In 2024, the global market was estimated around $16.6 billion in premium volume, with North America leading and rates broadly stabilizing after prior spikes. As adoption grows, carriers are focusing less on price and more on systemic risk (for example, cloud outages and large supply-chain events such as the MOVEit data breach, which impacted 2,700 organizations). These risks shape insurance coverage terms and incident response expectations.
What Does Cyber Insurance Typically Cover?
Most policies address first-party losses (your own costs) and third-party liabilities (claims against you). First-party coverage often includes breach response, business interruption, data recovery, and cyber extortion (ransomware). Third-party coverage can include privacy liability, media liability, and some regulatory defense and penalties where insurable by law. Note that coverage varies: social engineering and funds transfer fraud are frequently sub-limited or excluded unless specifically endorsed and accompanied by verification procedures.
Underwriting is Tighter—Controls Matter
To qualify for coverage (or better pricing), carriers increasingly require baseline controls such as multi-factor authentication (MFA) for email, remote access, and administrative accounts; privileged access management; endpoint protection; and patch management. Insurers now commonly mandate MFA before quoting or renewing cyber coverage. Many also look for managed detection and response (MDR) services, security information and event management (SIEM) as a service, and security operations center (SOC) as a service capability—either in-house or via a managed cybersecurity services partner.
Claims Trends to Watch
Ransomware remains a top severity driver, even as business email compromise (BEC) and funds transfer fraud now account for the majority of reported incidents for some carriers. Large-scale events (for example, supply-chain compromises) have lifted claim frequency, and privacy litigation is rising—especially in the United States—requiring careful attention to data protection and backup services and cloud backup and disaster recovery strategies.
Where Compliance Meets Coverage
Regulatory frameworks influence underwriting and incident response:
- Health Insurance Portability and Accountability Act (HIPAA): Healthcare entities need policies that contemplate breach response, notification duties, and potential penalties (where insurable), in addition to robust HIPAA cybersecurity compliance controls.
- European Union General Data Protection Regulation (GDPR): Whether administrative fines are insurable depends on jurisdiction and policy language; companies must review “fines and penalties” provisions carefully.
- National Institute of Standards and Technology (NIST) Special Publication 800-171 (Protecting Controlled Unclassified Information, or CUI): Contractors handling federal data should align with NIST cybersecurity framework support and NIST SP 800-171 Rev. 3 control families—an approach that also strengthens insurability.
Cybersecurity Maturity Model Certification (CMMC) 2.0 (Department of Defense program): A phased rollout began with rulemaking in 2024–2025; contractors handling Federal Contract Information (FCI) or Controlled Unclassified Information (CUI) will face self-assessment or third-party assessment requirements over the next three years.
Costs for Small and Midsize Businesses
While pricing is company-specific, recent market data shows a median premium around $145 per month (about $1,740 annually) for small businesses—depending on limits, deductibles, industry, and security posture. Strengthening controls (for example, zero trust security architecture, identity and access management, and multi-factor authentication services) can improve eligibility and moderate premiums.
How to Prepare Before Buying (or Renewing) Cyber Coverage
- Map your digital exposure. Inventory sensitive data, third-party dependencies, and critical systems (including Office 365 managed services, Azure managed services provider configurations, and managed cloud services) to size appropriate limits and sub-limits.
- Harden controls to carrier expectations. Implement MFA everywhere, endpoint detection and response (EDR), managed endpoint protection, network security monitoring, and incident response playbooks.
- Clarify endorsements and exclusions. Confirm ransomware protection managed services and cyber extortion language; add fraudulent instruction coverage if you move funds via email instructions; verify any callback/out-of-band requirements.
- Integrate compliance and resilience. If you operate in regulated sectors, align compliance management services with your policy’s regulatory defense and notification coverage; healthcare and payments should consider PCI DSS managed security plus HIPAA-compliant IT services.
- Leverage value-added services. Many carriers bundle threat intelligence, tabletop exercises, and incident response hotlines; taking advantage of these improves cyber risk management services and may reduce claim severity.
The Bottom Line
Cyber insurance is not a substitute for security; it is a financial backstop that rewards strong data hygiene. Pair a right-sized policy with proactive IT support (for example, network monitoring and management, remote monitoring and management (RMM), cloud security services, and data loss prevention solutions) to reduce risk and improve recovery outcomes.
FocusConnect is a Denver-based managed IT services provider committed to collaboration, innovation, and leadership. We specialize in delivering secure, scalable solutions that align with today’s evolving industry standards—never yesterday’s. Our expert team empowers organizations to enhance cybersecurity, streamline operations, and reduce costs through tailored strategies designed to grow with your business. Partner with FocusConnect to future-proof your IT infrastructure and drive sustainable success.