Navigating the Cyber Insurance Landscape: A CISO’s Perspective

Strategies, Challenges, and Best Practices for Securing Coverage in an Evolving Threat Landscape

The rapid evolution of cyber threats—and the equally swift changes in the geopolitical and business landscapes—have made cyber insurance a critical component of any robust cybersecurity strategy. As a CISO and someone who has spent countless hours discussing these issues with experts on the CyberHub Podcast, I’ve seen firsthand how the challenges of obtaining and maintaining cyber insurance are often underestimated.

In this article, I’ll explore the key issues that cybersecurity practitioners and CISOs must consider when navigating the cyber insurance market, offering insights into how to secure the best coverage for your organization.

1. Understanding the Business Risks

1.1 Aligning Coverage with Business Objectives

At its core, cyber insurance should function as one element of a holistic risk management approach. It’s not a silver bullet, and it certainly doesn’t replace strong cybersecurity practices. Rather, think of it as a financial backstop that can help your organization recover from a breach or incident. When deciding how much coverage your organization needs, you must first identify your critical business assets—customer data, intellectual property, financial records, etc.—and calculate the potential operational and reputational damage of a breach.

• Use Case: A healthcare provider that maintains sensitive patient records would need a policy that covers privacy liability, notification costs, and regulatory fines. By aligning policy terms with core business operations (i.e., safeguarding health data), the organization ensures its coverage protects its most vital assets.

1.2 Communicating with the Board and Executive Team

Securing the right insurance policy often requires board-level approval. Executives and board members may not be cybersecurity experts, so CISOs must effectively communicate risk in business terms. Describe the worst-case scenarios: data breaches, ransomware attacks, brand reputation hits, and financial losses. This approach will highlight the value of cyber insurance as part of a broader cybersecurity and business continuity strategy.

• Practical Tip: Prepare a one-page brief that translates cybersecurity jargon into the language of ROI, risk reduction, and business impact. This helps the leadership team understand the real costs of cyber threats and the potential insurance benefits.

2. Geopolitical Tensions and Their Impact on Coverage

2.1 The “Acts of War” Exclusion

One of the biggest areas of confusion in cyber insurance policies revolves around the “acts of war” exclusion. With cyberattacks increasingly launched by nation-states or their proxies, insurers may attempt to classify certain attacks as acts of war or terrorism, which are often excluded from standard policies. This means that if your organization falls victim to a state-sponsored cyberattack, your insurance policy might not cover the incident.

• Real-World Example: A landmark case involved Merck & Co. and the 2017 NotPetya attack. Merck faced significant damages from the alleged state-sponsored ransomware incident, and the insurer initially denied coverage based on the “act of war” exclusion. However, the courts ultimately ruled in Merck’s favor, determining that the attack did not meet the legal definition of an act of war. This case serves as a critical example of how policy language—and the courts’ interpretation of it—can dramatically impact coverage in nation-state-related incidents.

2.2 Mitigating Geopolitical Risks through Cyber Hygiene

Because the line between criminal and state-sponsored threats is so blurry, the best approach is to strengthen overall cyber hygiene. Effective access control, endpoint protection, network segmentation, and zero-trust architecture can deter both run-of-the-mill cybercriminals and advanced persistent threats.

However, insurers also have minimum baseline requirements before they’re willing to provide coverage or to offer more favorable terms. These often include:

• Multi-Factor Authentication (MFA) for critical systems, privileged user accounts, and remote access.

• Endpoint Detection and Response (EDR) Solutions to quickly detect and remediate threats.

• Regular Patch Management and Vulnerability Assessments to address known security flaws.

• Encryption of data at rest and in transit, especially for sensitive or regulated data.

• Incident Response and Business Continuity Plans, including evidence of tabletop exercises and recovery drills.

• Access Control Policies that enforce the principle of least privilege.

• Third-Party Risk Management measures, ensuring that vendors and partners also meet certain security standards.
  
  Insurers may require organizations to provide evidence that these controls are in place—or at least show a clear timeline for implementing them—before granting or renewing coverage. Any misleading statements during this process, could lead to claim denial and even criminal charges.

• Practical Tip: Many insurers now offer incentives—like premium discounts—for organizations that adopt strong security frameworks such as NIST, ISO 27001, or CIS Controls. This not only enhances your security posture but can also lead to more favorable policy terms and reduced premiums.

3. The Cybercrime Explosion

3.1 Ransomware and Business Email Compromise

Ransomware and business email compromise (BEC) remain two of the most prevalent threats. Insurers are keenly aware of these risks, which means they’ll scrutinize your preparedness when underwriting a policy. Expect questions about incident response plans, backup procedures, employee awareness training, and technical controls like multi-factor authentication (MFA) and email filters.

• Use Case: A manufacturing company hit by ransomware was able to recover quickly because they had a robust backup strategy with offline, immutable backups. Their insurer covered a significant portion of the incident response and recovery costs. This positive outcome was only possible because the organization had proven its adherence to best practices, documented thoroughly in their underwriting process.

3.2 Keeping Pace with Evolving Threats

Cybercriminals change tactics rapidly. Today’s must-have controls—MFA, endpoint detection and response (EDR), encryption—might be replaced by more advanced technologies tomorrow. CISOs must continuously evaluate their security posture to ensure it meets the evolving requirements insurers set forth.

• Practical Tip: Participate in threat intelligence sharing communities, such as ISACs (Information Sharing and Analysis Centers), to stay ahead of emerging threats. Demonstrating proactive threat intelligence capabilities can improve your stance with insurers and may bolster negotiations on coverage limits and premiums.

According to the Federal Bureau of Investigation (FBI), cybercrime continues to surge year over year. In its most recent Internet Crime Complaint Center (IC3) report, the FBI documented hundreds of thousands of cybercrime complaints, resulting in billions of dollars in losses. This includes everything from ransomware and business email compromise to cryptocurrency-related fraud.

These numbers not only highlight the widespread nature of cyber threats but also underscore the urgent need for businesses to adopt a proactive cybersecurity strategy—further validating the role cyber insurance can play in mitigating financial exposure.

4. Overcoming Challenges with Getting Cyber Insurance

4.1 Conducting a Thorough Risk Assessment

Before approaching an insurer, conduct a comprehensive risk assessment. You need a clear picture of your technology environment, existing controls, third-party dependencies, and overall risk tolerance. This assessment forms the foundation of your insurance purchasing strategy.

• Example: A financial services firm implemented a complete inventory of hardware, software, and data assets to understand its exposure. By identifying legacy systems and shadow IT, the firm was able to create a realistic threat profile that helped guide discussions with insurers.

4.2 Ensuring Insurers Fully Understand Your Controls

Insurance providers conduct extensive questionnaires and sometimes require an external audit or a third-party assessment. Clear, documented policies and procedures not only streamline this process but can reduce premiums by demonstrating your organization’s cybersecurity maturity.

• Practical Tip: Build a “security blueprint” document that summarizes your policies, processes, and technology. Include screenshots of configurations, policy links, and examples of security governance structures. This transparency reduces uncertainty and builds confidence in your risk management program.

4.3 Negotiating Policy Terms and Language

Cyber insurance policies aren’t standardized. Exclusions, definitions of covered events, sub-limits for specific losses, and coverage triggers can vary widely. Work closely with legal counsel and insurance brokers who specialize in cyber insurance.

• Key Focus Areas:

  • Definition of a “Security Breach”: Ensure that the policy language aligns with your understanding of what constitutes a covered incident.

  • Retroactive and Extended Reporting Periods: Cyber incidents are often discovered months after they occur. Make sure your policy accounts for breaches initiated before the policy term or detected after it ends.

  • Vendor/Supply Chain Coverage: Understand how your policy handles third-party liabilities. A compromise at a critical supplier could expose your organization to significant downstream risk.

Best Practices and Practical Takeaways

1. Develop a Strong Cybersecurity Foundation: No insurance policy can substitute for strong preventive and detective controls. Implementing best practices not only reduces the likelihood of a breach but can also lead to better policy terms.

2. Stay Informed on Evolving Geopolitical Risks: Engage with industry groups, read threat intelligence reports, and follow trusted cybersecurity resources. This situational awareness will help you address potential nation-state risks and respond quickly to emerging tactics.

3. Document, Document, Document: Insurance underwriters love evidence of mature processes. Collect and maintain documentation of policies, training, incident response drills, and third-party audits. This transparency can set you apart from other businesses and provide leverage in policy negotiations.

4. Leverage Expert Partners: Whether it’s an insurance broker specializing in cyber insurance, external legal counsel, or a cybersecurity consultancy, don’t hesitate to bring in experts. The cyber insurance market is still maturing, and specialized knowledge can be invaluable when navigating exclusions, sub-limits, and post-breach processes.

5. Test Your Incident Response Plan: Regular tabletop exercises and simulations will reveal gaps in your plan. It will also demonstrate your organization’s readiness to insurers, potentially improving coverage options.

Conclusion

In today’s rapidly changing threat landscape, cyber insurance is no longer a luxury; it’s an integral part of a comprehensive risk management strategy. As both a CISO and the host of the CyberHub Podcast, I’ve spoken with countless experts who all reiterate the same message: cyber insurance must be approached with the same diligence and rigor you’d apply to any other critical business decision. From defining coverage needs to negotiating exclusions and navigating geopolitical complexities, the path to securing adequate cyber insurance can be complex.

Yet, with the right combination of strong cybersecurity fundamentals, thorough risk assessments, and strategic communication with stakeholders, organizations can unlock policies that genuinely mitigate risk—and protect the bottom line. The key is preparation, transparency, and a proactive mindset. By focusing on these core principles, CISOs and cybersecurity practitioners can ensure their organizations are set up for success, no matter what cyber threats lie ahead.