Assurance over assumptions:
The cyber insurance playbook
The cyber insurance market is undergoing significant transformation. Securing coverage now means more than just buying a policy—it demands proof that your security program is truly effective.
Organizations often view cyber insurance and compliance as mere check-the-box exercises—buying tools, meeting basic requirements, and securing coverage to tick off a list. But this mindset creates a dangerous gap.
Relying on surface-level compliance or point-in-time solutions leaves businesses vulnerable to ransomware breaches and other sophisticated threats, while also putting insurance claims at risk of denial. The safety nets designed to protect you may fail when you need them most.
This guide breaks down how to move beyond surface-level compliance and generic insurance readiness. Instead of treating these as headaches, we’ll show you how to align them with a broader business strategy for genuine cyber resilience. You'll learn why claims are denied, what underwriters look for, and how to generate the right evidence to strengthen not only your insurance standing, but your security posture and operational maturity.
The evolution of cyber insurance underwriting
The cyber insurance market has evolved considerably in the last five years. As ransomware and cyberattacks caused record-breaking payouts in 2020 and 2021, loss ratios rapidly exceeded 66%—a jump of nearly 60% from the trailing 5-year average.
So, insurers adapt.
Premiums shot up by 75% in 2021 alone, and policy terms around expected controls and requirements tightened. By 2023, it was estimated that more than 40% of claims were denied payout. But even as loss ratios normalized back down to 41%, the pressure on security teams remained.
Even with stringent requirements and heavy scrutiny, the gap between compliance and real-world security continues to grow. Insurers and auditors demand rigorous controls to offset their risk—and yours—but breaches still happen and many claims are still denied.
Why?
Quite often, organizations lack the time and visibility required to ensure their security tools are truly effective, need to check the box, and leave all parties exposed.
Why do claims get denied?
Missing technical controls
Misrepresenting the state of controls
Process and procedure failings
Building better security practices that pay off
Insurance underwriters and compliance auditors prioritize risk mitigation. In addition to regulatory compliance, third-party risk management, and documented policies and response practices, underwriters expect and look for these technical controls when evaluating organizational risk.
Effective deployment and configuration of these controls significantly bolsters your chances of a successful claim, to say nothing of that fact of improved resilience against conditions that would instigate a claim to begin with.
Hardware inventory
Hardware inventory
Keeping a full inventory of every workstation and server closes blind spots attackers love to exploit and lays the groundwork for your broader security program. If you don’t know a device exists, you can’t patch it, monitor it, or secure it. Unmanaged endpoints are one of the top starting points for ransomware—including over 90% of attacks last year. A comprehensive inventory makes it possible to enforce EDR, vulnerability management, and configuration baselines everywhere.
Missing inventory is a red flag because it usually translates to unmanaged assets — and those are the ones that trigger breaches and claim denials. Being able to show a clean asset list with coverage percentages reduces premiums, builds confidence with underwriters, and helps ensure a claim gets paid if an incident occurs.
Additional resources
Security monitoring
Security monitoring
Continuous security monitoring, typically managed with a Security Information and Event Management (SIEM) tool gives you eyes on what’s happening across your network and endpoints in real time. Most breaches don’t happen in a single moment — attackers move laterally, escalate privileges, and sit undetected for weeks if nobody is watching. By collecting logs and correlating events, you can spot suspicious activity like repeated failed logins, unusual data transfers, or malware spreading before it becomes a business-ending incident.
If you can’t show evidence that you were actively monitoring and alerting, insurers can argue the incident was preventable and may deny or reduce claims. Many small businesses discover only after a breach that critical alerts were never reviewed because no SIEM or monitoring was in place.
Identity management
Identity management
Multi-factor authentication (MFA)
MFA is one of the simplest ways to shut down the most common attack path: stolen or compromised passwords. Without it, attackers can log in just like a legitimate user, and insurers often deny claims outright when MFA is missing on privileged, remote, or cloud accounts. It’s one of the very first controls underwriters check because it dramatically reduces breach likelihood. Ensuring MFA is deployed across systems and accounts reduces risk from compromised accounts and provides coverage to claims should they be needed.
Access management
Conditional access adds intelligence on top of MFA by enforcing rules about how and where accounts can be used. Requiring managed devices, blocking logins from certain geographies, or restricting high-risk activities like admin changes all mitigate attackers who manage to steal valid credentials. Insurers view this as risk segmentation—it limits the blast radius of an account takeover and shows you’ve gone beyond “check-the-box” MFA.
Restricting individual account access based only on activities required to do their assigned role (often referred to as least privilege) is another identity management control implemented to mitigate the risk associated with a compromised account.
Endpoint security
Endpoint security
Endpoint detection and response (EDR)
EDR focuses on behaviors and attacker techniques rather than relying on static file signatures or hashes. That means it can spot things like unusual process injections, credential dumping attempts, or ransomware encryption patterns — activity that slips past traditional AV. This behavioral detection is why insurers treat EDR as a must-have: without it, an attacker using legitimate tools or novel malware can operate undetected.
Antivirus (AV)
Traditional AV is still expected as a baseline. While it’s not enough on its own, it catches commodity malware and known threats, reducing the noise EDR has to handle. Insurers look for AV coverage because its absence signals basic hygiene issues. Think of AV as the minimum bar: without it, a claim tied to malware infection is easily contested.
Host Firewall
A host-based firewall enforces rules on every device, even if it’s off the corporate network. Blocking inbound traffic and controlling outbound connections helps contain threats that bypass other layers. Insurers see this as evidence of layered defense—especially important for laptops that leave the office. Environments without host firewalls often suffer from lateral movement after an initial breach, which can make the difference between a contained incident and a company-wide ransomware event.
Vulnerability management
Vulnerability management
Vulnerability scanning closes the gap between “knowing” and “not knowing” where you’re exposed. Attackers don’t need zero-days when unpatched systems are sitting open, and insurers know this. Regular scanning shows you which servers and endpoints are missing critical patches or misconfigured—issues that directly fuel ransomware and data breaches.
We often see that 12–15% of devices in a new environment have never had a vulnerability scan, which means associated vulnerabilities are invisible to IT until an attacker finds them. From an insurance perspective, failing to scan and remediate is viewed as negligence. Being able to demonstrate consistent, risk-based vulnerability management reassures underwriters, lowers premiums, and greatly improves your chance of having a claim honored.
Backups
Backups
egular backups are the safety net that keeps a breach or ransomware attack from becoming a business-ending event. If attackers encrypt or destroy production data, having clean, recent backups is often the only way to recover quickly without paying ransom. Insurers view backups as a core requirement because they directly limit financial impact — but only if they’re usable. Too often, backups exist but can’t be restored when needed due to corruption, misconfiguration, or because they were also encrypted in the attack.
Testing backups means running periodic restore exercises, not just checking that files were copied. That can be as simple as restoring a random set of files to a test environment, or as involved as spinning up a server image from backup to confirm it boots properly. Insurers and auditors increasingly ask for evidence of these tests, because an untested backup is treated the same as no backup at all. Being able to show logs or reports of successful restore tests proves resilience and strengthens your insurance position.
Validating the effectiveness of your risk management
Implementing controls is necessary, but not wholly sufficient. Ransomware actors don’t succeed because businesses lack security tools; they succeed because coverage is incomplete, devices fall out of management, or failures go undetected until it’s too late. Effective risk and exposure management means proving that controls are not only deployed, but continuously working as intended. This discipline both reduces real exposure and creates the defensible evidence insurers, regulators, and auditors now expect.
Cyber insurance applications function as legal attestations of fact. Listing tools like EDR, MFA, or vulnerability scanning implies they are deployed and effective across your environment. Without ongoing validation, those claims can unravel quickly under the scrutiny of an underwriter or during a breach investigation. The same holds true for incident response: insurers will ask not simply if a control existed, but whether you can prove it was active at the time of compromise. Logs, automated reports, and forensic-quality documentation often carry as much weight as the controls themselves.
How Prelude continuously monitors and validates your security controls
Continuous validation as the foundation of your evidence program
Manual attestations and point-in-time audits often masquerade as risk management. But, security environments change daily—devices appear and disappear, policies drift, scans don't complete. Continuous validation addresses this reality by automatically confirming that controls remain present, configured correctly, and effective against real-world scenarios. It provides early warning when coverage weakens, helping teams fix issues before they’re exploited.
More importantly, continuous validation generates a living trail of evidence. Dashboards and automated reports turn technical telemetry into defensible artifacts for leadership, auditors, and underwriters. Aligned with recognized frameworks like NIST or ISO 27001, this evidence is structured, repeatable, and authoritative.
For insurers, it reduces ambiguity; for your organization, it reduces disputes at renewal or in the midst of a claim. The result is a security program that evolves with your risk landscape, increases ransomware resilience, and strengthens your ability to demonstrate operational maturity when it matters most.
From obligation to opportunity
Cyber insurance should never be treated as a checklist to satisfy investors, auditors, or enterprise deals. Done right, it becomes a forcing function that strengthens your defenses, sharpens your processes, and improves your ability to withstand ransomware and other disruptive threats.
The same deliberate validation that prepares you for an application also reduces the chance you’ll ever need to make a claim. And if you do, the evidence you’ve built increases the likelihood that claim will be honored.
Approaching insurance through this lens reframes it from a cost of doing business into an investment in resilience. By methodically validating control coverage, embedding continuous evidence into operations, and treating renewals as opportunities to mature, organizations align insurance requirements with true security outcomes. The result is not only a stronger negotiating position with insurers, but a measurable reduction in exposure and a greater ability to recover quickly when tested.
Insurance, then, is not just about financial protection after the fact. It’s a catalyst for building a more resilient, adaptable security program—one that prevents more incidents, proves its effectiveness, and ensures support is there if the worst happens.
Better resilience doesn't need to take a village. It just takes Prelude.
Prelude automatically validates the coverage and efficacy of the tools and policies you need to mitigate your risk and maximize your likelihood of a successful insurance claim.
