If you are running a business, you may be asking: “Why does my cyber insurance provider keep asking about compliance, and does it really matter?”
For many executives, insurance used to feel like a simple safety net. Pay your premium, and you were covered if something went wrong. Those days are gone. The rise in cyberattacks has forced insurers to change how they assess risk. Now, they want evidence that your company is actively reducing threats before they agree to cover you, or they might limit your coverages.
As Edward Griffin, Chief Information Security Officer at Intelligent Technical Solutions (ITS), explained, “for a cyber insurance company, obtaining an insured party's risk management attestations would be a key mechanism to quantify the insured's risk exposure and determine suitable coverages and premiums.”
He added that “operationally mature insured parties may be eligible for higher coverages or lower premiums when compared to peer companies carrying greater cybersecurity risks.”
Compliance and cyber insurance are now deeply connected. Understanding how they work together can help your business avoid costly surprises.
Why Cyber Insurers Care About Compliance
Cyberattacks are not only increasing in number but also in sophistication. Ransomware, phishing, and data breaches cost businesses billions each year. Insurers need to protect themselves from paying out massive claims to companies that did not take basic precautions.
Compliance frameworks give insurers confidence. Standards like SOC 2, HIPAA, PCI DSS, and NIST outline specific controls and practices. If your business can prove you follow them, insurers see you as a lower risk.
Without this proof, insurers may assume you are vulnerable. The result could be higher premiums or, in some cases, refusal to issue a policy at all.
The Link Between Compliance and Premiums
Compliance not only helps you avoid fines and penalties, it can also directly affect how much you pay for cyber insurance.
Insurers look at three main factors when setting premiums:
- The frameworks you follow: A business with SOC 2 or ISO 27001 certification demonstrates maturity, while one with no framework appears high-risk.
- Your ability to prove compliance: Policies and promises are not enough. Insurers want audit reports, logs, and attestations.
- Gaps in your risk management: If insurers find weak areas, such as poor access controls or lack of multifactor authentication, expect to pay more.
Businesses that cannot show compliance often see premiums increase significantly. In some cases, premiums double or triple compared to those with strong compliance records.
What Compliance Attestations Mean for Insurance
Attestations are external validations that prove your compliance. They carry more weight than internal policies because they come from independent auditors.
For example:
- SOC 2 Type II: Verifies your security and availability controls work over time, not just on paper.
- HIPAA Validation: Shows healthcare providers that you are serious about protecting patient data.
- ISO 27001: An international standard that proves strong security governance.
To an insurer, these attestations show that your company is not improvising. You are following structured processes that reduce risk. That proof can be the difference between affordable coverage and sky-high premiums.
The Risks of Non-Compliance
Failing to align compliance with insurance can be costly. The risks include:
- Denied claims: If a breach occurs and you cannot prove compliance, your insurer may refuse to pay.
- Higher premiums: Without evidence of risk controls, insurers may treat you as a high liability.
- Limited coverage: Policies may exclude certain types of incidents if you cannot show compliance.
In practice, this means you could suffer a major breach, file a claim, and discover that your policy does not cover the damages because you were not meeting compliance requirements.
How to Align Compliance and Insurance
The key is to view compliance and cyber insurance as two sides of the same coin. Both exist to protect your business, and they work best when aligned.
1. Map Compliance Frameworks to Insurance Requirements
Review your policy. Identify which frameworks your insurer expects. Healthcare providers should focus on HIPAA, financial firms on SOC 2 or PCI DSS, and government contractors on NIST.
2. Pursue the Right Attestations
Invest in the attestations that matter most to your industry and client base. SOC 2 or ISO 27001 can open doors to enterprise deals while also lowering your insurance risk profile.
3. Document Everything
Evidence is the lifeblood of both compliance and insurance. Automate collection of logs, tickets, and approvals so you can easily prove your security measures are in place.
4. Work With Experienced Partners
An MSSP like ITS can help you build compliance programs that satisfy auditors and insurers. They bring expertise in aligning controls with both operational needs and insurance expectations.
The Business Advantage
Strong compliance does more than protect insurance coverage. It creates a ripple effect across your business:
- Improved client trust: Clients feel safer working with a partner who can prove compliance.
- Reduced liability: Attestations lessen penalties after a breach.
- Stronger negotiations: With compliance proof, you can negotiate better insurance terms.
- Growth opportunities: Many enterprise clients will only work with vendors that can prove compliance maturity.
In other words, it shows that “we are doing the work to try to earn their trust and keep their trust,” Griffin said.
Compliance is about more than rules. It is about showing every stakeholder that you are a reliable business.
Need Help with Your Compliance and Cyber Insurance Goals?
Cyber insurance is no longer a simple transaction. Insurers expect proof that your business is secure and compliant before they agree to cover you. Compliance frameworks and attestations provide that proof.
By aligning compliance with your insurance strategy, you can reduce premiums, strengthen coverage, and protect your organization from costly breaches.
This is where ITS can help. Our team has deep expertise in both cybersecurity and compliance. We work with you to build a compliance program that not only satisfies auditors and insurers but also strengthens your entire security posture.
Book a free consultation with ITS to assess your compliance and cyber insurance readiness.
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