Why Your Cyber Insurance Might Not Pay Out – And How to Avoid an Expensive Surprise

Cyber insurance has become an essential safeguard for businesses of all sizes. Whether it's protecting against ransomware, data breaches or business interruption, many organisations assume that having a policy means they're covered should the worst happen.

Unfortunately, that's not always the case.

Over the past few years, insurers have tightened their requirements significantly. As cyber-attacks have become more sophisticated and costly, insurance providers are expecting businesses to have robust security measures in place before they'll pay out on a claim.

The worrying part? Many businesses don't realise they fall short until it's too late.

Why Are Insurers Becoming More Strict?

The cost of cybercrime continues to rise, with ransomware attacks alone costing businesses millions of pounds every year. Insurers have responded by asking businesses to demonstrate that they have taken reasonable steps to protect themselves.

In many cases, cyber insurance policies now include minimum security requirements. If these aren't met, insurers may reduce or even reject a claim.

Common Reasons a Claim Could Be Rejected

Multi-Factor Authentication (MFA) Isn't Fully Enabled

One of the most common policy requirements is Multi-Factor Authentication (MFA). It's no longer enough to protect just your Microsoft 365 account—insurers increasingly expect MFA to be enabled across:

• Email accounts
• Remote access (VPN)
• Administrator accounts
• Cloud applications
• Business-critical systems

If MFA isn't consistently enforced, your insurer may question whether reasonable security measures were in place.

Software Isn't Kept Up to Date

Cyber criminals actively target known vulnerabilities in outdated software.

If critical security updates haven't been applied within a reasonable timeframe, insurers may argue that the attack could have been prevented.

Regular patch management isn't just good practice—it's becoming an expectation.

Backups Haven't Been Properly Tested

Many businesses proudly state they have backups.

Far fewer regularly test whether those backups actually work.

If your backups fail during a ransomware attack because they haven't been monitored or tested, the financial consequences can be devastating.

Modern backup strategies should include:

• Regular automated backups
• Off-site or cloud copies
• Immutable backups that can't be encrypted by attackers
• Routine recovery testing

Staff Haven't Received Cyber Security Training

People remain one of the biggest cyber security risks.

A single phishing email can lead to stolen passwords, fraudulent payments or ransomware.

Many insurers now expect businesses to provide regular cyber awareness training to staff, helping them recognise suspicious emails and reduce the likelihood of successful attacks. Phishing Simulation Testing is now a must for any business or organisation.

Weak Password Policies

Simple or reused passwords remain one of the easiest ways for attackers to gain access.

Businesses should enforce:

• Strong password requirements
• Password managers where appropriate
• MFA alongside passwords
• Removal of shared user accounts

Endpoint Protection Is Inadequate

Traditional antivirus software is no longer sufficient against today's threats.

Modern Endpoint Detection and Response (EDR) solutions continuously monitor devices for suspicious behaviour and can isolate infected machines before malware spreads across the network.

Many insurers now expect businesses to deploy advanced endpoint protection across all company devices.

It's Not Just About Technology

Cyber insurers increasingly want evidence that businesses have documented processes in place.

This may include:

• Incident response plans
• Disaster recovery procedures
• Access control policies
• Regular security reviews
• Supplier risk management
• Asset inventories
• Staff training / Phishing awareness

Good cyber security is no longer just about installing software—it's about demonstrating good governance.

Could Your Business Pass a Cyber Insurance Assessment?

If you're unsure whether your current IT setup meets your insurer's expectations, you're not alone.

Many businesses have cyber insurance policies that were arranged several years ago, before insurers introduced today's stricter requirements. Since then, both the threat landscape and insurers' expectations have evolved significantly.

A simple review can often identify gaps before they become costly problems.

How Soltech IT Can Help

At Soltech IT, we help businesses strengthen their cyber security by reviewing their existing systems, identifying vulnerabilities and recommending practical improvements that align with current best practice.

Whether you're renewing your cyber insurance, looking to improve your security posture or simply want reassurance that your business is properly protected, we're here to help.

Don't Wait Until You Need to Make a Claim

Cyber insurance is an important safety net—but like any insurance policy, it's only valuable if it responds when you need it.

Taking the time to review your security measures today could save your business significant financial and operational disruption in the future.

If you'd like to discuss your cyber security or arrange a security review, get in touch with the Soltech IT team today.

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