The Impact of Rising Cybersecurity Insurance Costs and How to Lower Your Premiums

Cyber insurance has become a critical safety net for modern businesses. But as cyberattacks become more frequent and severe, cybersecurity insurance costs are climbing fast, leaving many organizations scrambling to find affordable protection. Learn what’s driving these costs and how to manage them can help you avoid overpaying or, worse, being denied coverage altogether.

Why Cybersecurity Insurance Costs Are on the Rise

The root of rising premiums lies in the flood of claims insurers are facing. Ransomware groups are increasingly organized and better funded than ever. Phishing attacks are more convincing. And once attackers break into a system, the cost of recovery, including downtime, data restoration, forensics, legal fees, and notification obligations, can be enormous.

Insurers are seeing loss ratios climb dramatically. To compensate, many have hiked base rates, raised deductibles, and reduced coverage limits. They’re also becoming far more selective about who qualifies for coverage in the first place.

For example, businesses that don’t meet certain technical criteria may not be approved for any coverage at all. And if they are, it often comes at a steep price. That’s why many organizations now treat cybersecurity insurance costs as a direct reflection of their security posture.

Security Controls Insurers Now Require

To determine your risk, most insurers assess whether your business has basic cyber hygiene in place. This no longer means just antivirus and a firewall. These days, insurers are checking for the following:

Multi-Factor Authentication (MFA): This is one of the most widely enforced requirements. Insurers want to see MFA across email, remote access, cloud systems, and privileged accounts.

Endpoint Detection and Response (EDR): Traditional antivirus isn’t enough. EDR tools monitor for suspicious behavior on devices and respond automatically to threats, making them a must-have for many policies.

Regular Security Assessments: Insurers increasingly require documentation of internal or third-party audits. These might include vulnerability scans, penetration tests, or broader risk assessments.

Data Backup and Recovery: Secure, offsite backups are essential, not just in case of ransomware, but for compliance and data loss scenarios. Insurers may ask for your RTO (Recovery Time Objective) and RPO (Recovery Point Objective).

Employee Security Training: Human error causes the majority of cyber incidents. Many insurers now require annual training or ongoing phishing simulations to educate employees.

Incident Response Plans: A documented IR plan is often required, demonstrating that you have a defined process to contain and respond to cyber events.

Insurers are no longer asking if you have security, but proof.

How a Strong Security Posture Helps Lower Premiums

Cyber insurance operates on a simple premise: lower risk equals lower cost. When your organization shows it has controls in place to prevent or respond to attacks, you become a better candidate for coverage.

Here are four ways a proactive approach to security reduces your cybersecurity insurance costs:

1. Improved Risk Ratings: Most underwriters assign a risk score to applicants. Higher scores lead to better terms and reduced premiums.

2. Fewer Incidents, Fewer Claims: Insurers favor clients who rarely file claims. Effective security controls mean fewer breaches, which protects your record and keeps your costs down over time.

3. Access to Better Coverage: If you can demonstrate compliance with best practices, insurers may offer broader protection, including coverage for reputational damage, business interruption, or third-party liability.

4. Stronger Negotiation Leverage: Security maturity gives you more leverage when negotiating exclusions, sub-limits, or deductibles.

Beyond stopping threats, security investments directly influence the amount you pay for coverage and the protection you receive.

Looking to reduce rising premiums and improve your long-term security posture? Discover how building a cybersecurity strategy that scales with your business enhances protection and positions you to stay compliant and cost-efficient as you grow.

Stay Informed

Small Changes That Make a Big Difference

You don’t need enterprise-level resources to make meaningful improvements. Many smaller businesses can reduce premiums by focusing on high-impact actions like:

Enabling MFA Everywhere: Cloud providers like Microsoft 365 and Google Workspace offer built-in MFA options. It’s one of the easiest ways to check a major box for underwriters.

Switching to EDR Tools: Endpoint protection with behavioral monitoring and response is quickly becoming a standard. If you haven’t already moved past legacy antivirus, now’s the time.

Scheduling a Security Assessment: A basic vulnerability scan or third-party audit can reveal issues you may not even realize exist, and give you documentation for your insurer.

Documenting Your IR and Backup Strategy: Even a simple write-up of who handles incidents, how backups are stored, and how data would be recovered can help.

Running Employee Awareness Training: This doesn’t need to be expensive. Many managed service providers include phishing simulations or LMS access as part of their services.

Start with what insurers prioritize most. This will reduce your premiums and lower your overall risk.

How In Balance IT Helps Reduce Cybersecurity Insurance Costs

In Balance IT works with businesses across Chicago and beyond to help them qualify for the best possible cyber insurance terms. We understand what insurers are looking for and how to help you meet those requirements efficiently and affordably.

Our services include:

Managed MFA setup and monitoring
Advanced endpoint detection and response (EDR) solutions
Full backup and disaster recovery implementation
Employee security awareness training
Security assessments with documentation for underwriters
Help building or updating your incident response plans

Instead of simply helping you tick boxes, we build sustainable security programs that improve your cyber resilience and reduce your exposure. This results in fewer incidents, stronger coverage, and better control over your premiums.

The Bottom Line

Cybersecurity insurance costs are rising, but you don’t have to choose between paying more and being unprotected. By improving your defenses and working with a partner who understands both insurance requirements and modern cyber threats, you can make smarter investments that benefit your business in multiple ways.

A proactive approach reduces your risk of breach, strengthens your negotiating power with insurers, and ensures your business is protected before (and after) a cyber event.

Save Costs With In Balance IT

Want to learn how your business can qualify for better cyber insurance coverage without breaking the bank? Contact In Balance IT today for a consultation and take control of your cybersecurity strategy and insurance costs.