Cyber Insurance: Coverage Is Up, But Will Your Claim Get Paid?

The cyber insurance market is in flux. Aon and Marsh report that about 20-25% of businesses increased their coverage limits in the last year. However, simply having a policy, or even more coverage, doesn't guarantee a smooth claims process. Insurers are intensifying their scrutiny, making it vital to understand why claims get denied. Don't let your investment be undermined. 

Here are the key reasons your cyber insurance claim could hit a roadblock: 

𝙎𝙚𝙘𝙪𝙧𝙞𝙩𝙮 𝙂𝙖𝙥𝙨 & 𝙐𝙣𝙢𝙚𝙩 𝙋𝙧𝙤𝙢𝙞𝙨𝙚𝙨: 

 • Failure to Maintain Standards- Policies often mandate specific security controls (MFA, endpoint detection, regular patching, robust backups). If these weren't consistently implemented as declared in your application, your claim is at risk. 

 • Poor Prevention Practices- Insurers expect "due care." Negligence in basic cybersecurity hygiene can be grounds for denial. 

𝘼𝙥𝙥𝙡𝙞𝙘𝙖𝙩𝙞𝙤𝙣 & 𝙍𝙚𝙥𝙧𝙚𝙨𝙚𝙣𝙩𝙖𝙩𝙞𝙤𝙣 𝙄𝙨𝙨𝙪𝙚𝙨: 

 • Misrepresentation- Inaccurate or incomplete information about your security posture, controls, or incident history on your application can lead to a voided policy or denied claim. 

 • Undisclosed Pre-Existing Events- Failing to disclose known vulnerabilities or prior incidents before policy starts that later contribute to a claim can be problematic. 

𝙏𝙝𝙚 𝙋𝙤𝙡𝙞𝙘𝙮'𝙨 𝙁𝙞𝙣𝙚 𝙋𝙧𝙞𝙣𝙩: 

 • Specific Excluded Events- Many policies explicitly exclude losses from "Acts of War" (though definitions vary and are often debated), failures of core internet infrastructure, or events pre-dating the policy's retroactive start date. 

 • Third-Party Lapses: If a breach originates with a vendor, your coverage might be impacted if they didn't meet your policy's required security standards or if there's a vicarious liability exclusion. 

𝙋𝙧𝙤𝙘𝙚𝙙𝙪𝙧𝙖𝙡 & 𝘿𝙤𝙘𝙪𝙢𝙚𝙣𝙩𝙖𝙩𝙞𝙤𝙣 𝙁𝙖𝙞𝙡𝙪𝙧𝙚𝙨: 

 • Delayed Reporting- Most policies have strict timelines for notifying the insurer of an incident. Missing this window can be detrimental. 

 • Inadequate Documentation: Lack of clear, comprehensive proof of your security measures, the breach itself, and the full scope of losses makes it hard for insurers to approve a claim. 

By proactively addressing these areas, executive leadership can enhance the likelihood of a successful cyber insurance claim and safeguard the organization's financial stability in the face of a cyber incident. 

MARSH REPORT 

https://lnkd.in/gv4eEj93 

AON REPORT 

https://lnkd.in/gvQBahUJ