Sanjay Kumar Mohindroo
Cyber insurance is more than protection—it's a leadership decision. Discover what every CIO and IT leader must know before investing.
When Cybersecurity Isn’t Enough
In a world where cyber threats evolve faster than most companies can adapt, relying solely on firewalls, SOCs, and password policies is no longer enough. While cybersecurity measures form the first line of defense, no shield is impenetrable. This is where cyber insurance enters the picture—not as a crutch, but as a strategic tool that cushions the blow when things go wrong.
As a CIO or CISO, you already understand that cybersecurity is a journey, not a destination. But what happens when your roadmap is perfect, and yet a zero-day exploit takes your business offline? Or when a ransomware group encrypts your backups, too? This post is written from one technology leader to another, not to pitch insurance as a magic solution, but to elevate it as an essential risk transfer strategy that complements your broader cyber resilience architecture.
Let’s explore what cyber insurance covers, what it doesn’t, and how to approach it like a leader, not just as a buyer, but as a strategist.
A Boardroom-Level Concern
Cyber insurance is no longer just an IT issue—it’s a business continuity decision. CEOs and CFOs are now sitting beside CISOs to ask a critical question: Can we afford not to have cyber insurance?
The frequency, scale, and cost of cyber incidents are exploding. According to IBM’s Cost of a Data Breach Report 2024, the average global cost of a data breach has reached $4.45 million, with the U.S. averaging over $9.5 million. And these are just averages.
Cyberattacks now impact:
Stock performance within 24 hours
Customer trust across digital touchpoints
Regulatory standing, especially with GDPR, HIPAA, and India’s DPDP Act
M&A valuations, where a breach can tank a deal
For digital transformation leaders, the decision to invest in cyber insurance intersects directly with IT operating model evolution and long-term data-driven risk management.
This is no longer about ticking a compliance box. It’s about protecting the business outcomes we’re paid to deliver.
A Shifting Landscape
Let’s look at the reality, backed by data and experience.
1. The Market is Hardening
Premiums are rising. Coverage is shrinking. Insurers are tightening underwriting standards. In 2023, more than 50% of organizations globally reported a 25-50% rise in cyber insurance premiums, even without making a claim.
Why? Because the risk environment has escalated. Threat actors are better funded. Ransomware-as-a-Service is booming. And insurers are facing billion-dollar losses.
2. Not All Policies Are Equal
Some cyber insurance policies exclude “acts of war”—a clause that became controversial during the NotPetya attack, which several insurers refused to pay for. Others exclude social engineering, the root cause of many business email compromises.
Always read the fine print. Better yet, have your legal, IT, and risk teams read it together.
3. Coverage Isn’t Immediate
Unlike home insurance, cyber insurance doesn’t offer plug-and-play protection. Most policies come with rigorous risk assessments. They often require evidence of controls, like:
• MFA across all systems
• Encrypted backups
• Regular patching schedules
• Updated incident response plans
And if you don’t have them? Either you won’t get insured, or you’ll pay 3x the premium.
4. Regulations are Driving Adoption
Laws are evolving quickly. The SEC in the U.S. now requires companies to disclose material cyber incidents within four business days. India's DPDP Act mandates reasonable security practices, and cyber insurance is increasingly seen as part of that.
Real Talk from the Trenches
Don’t Delegate Blindly: I once made the mistake of letting procurement handle the cyber insurance process alone. We ended up with a policy that excluded third-party vendor breaches—ironically, the most likely vector in our risk model. Ever since, I’ve ensured cross-functional alignment: Risk, IT, Legal, and Procurement.
It’s a Relationship, Not a Transaction: Good insurers act like partners, not vendors. They’ll help simulate breach scenarios, run tabletop exercises, and even vet your vendors. When choosing a policy, look at what post-breach support they offer—not just payouts, but access to forensic teams, legal help, PR counsel, and ransomware negotiators.
Coverage is Not Capability: Some leaders mistakenly see insurance as a fallback plan. It’s not. If your IR plan is broken or your detection capabilities are weak, money won’t stop the damage. Cyber insurance should be the last layer in a well-built, multi-layered resilience model.
A Leader’s Decision Matrix
Here’s a simple yet powerful framework I use with boards and CIO peers:
The Cyber Insurance M.A.P. Framework
M – Maturity of Internal Controls
Evaluate where your organization stands across:
• Identity & Access Management
• Data Encryption
• Patch Management
• Cloud Security
• Vendor Risk Management
A – Appetite for Risk Transfer
How much residual cyber risk are you comfortable owning vs. transferring? Use cyber risk quantification tools to put a dollar value on your risk exposure.
P – Policy Alignment with Business Goals
Your coverage should reflect your operating model:
• Do you operate across jurisdictions with varying regulations?
• Is customer trust your key value prop?
• Are you undergoing an M&A or IPO?
Match your policy’s terms to your business context.
Use this model in strategic planning sessions, not just renewal season.
Stories That Stick
Ransomware + Supply Chain = Chaos
A global auto parts supplier was hit by ransomware during peak season. Their operations froze. Their backup systems failed. They had cyber insurance, but it didn’t cover operational downtime caused by third-party software dependencies.
The result? $25M in revenue loss. The lesson? Always model dependencies. Ask the “what if your ERP vendor goes down?” questions early.
The CEO’s Phishing Email
In a mid-sized fintech firm, an attacker impersonated the CEO and got the finance head to wire $750K to a fake vendor. Insurance declined the claim because the policy excluded “voluntary parting of funds.” The clause is buried on page 27.
Moral of the story? Cyber insurance doesn’t cover carelessness.
From Coverage to Culture
The cyber insurance space is undergoing a quiet revolution. Here’s what leaders should expect:
Embedded Risk Scoring: Insurers will soon offer dynamic premiums, adjusting coverage based on real-time risk indicators (think credit scores for cybersecurity).
AI + Insurance: Insurers are beginning to use AI to assess risks, predict threats, and support breach response.
Sector-Specific Offerings: As risks evolve, industries like healthcare, education, and finance will see tailored policies.
But here’s the larger shift: Cyber insurance will no longer be a “policy” on a shelf. It will be part of your real-time operating model.
As leaders, we must move away from viewing it as a safety net and instead integrate it into risk culture, right alongside SOC metrics and business continuity KPIs.
So, ask yourself and your board: What would it cost if your organization were offline for a week? Then ask your CFO if you're ready to bet that amount without a cushion.
The future of digital transformation leadership lies in not just how well we build, but how wisely we insure.
Are you currently evaluating cyber insurance for your organization? What challenges or surprises have you faced? I'd love to hear your stories and learnings.