Think Cyber Insurance is “Protection Enough”? Think again!

Paying a cyber security insurance premium is no substitute for taking measures to thwart cyber thieves. 

Almost half of cyber insurance claims are being denied.  As cyber breaches have become more common, insurers have become more stringent in their underwriting and assessment practices.

Insurers facing payouts are carefully scrutinising claimants’ cyber security practices.  If they conclude a company failed to take reasonable precautions to mitigate their cyber risks, they’re denying the claim.

No Guarantee

Cyber insurance is a critical safety net for a modern organisation.  But it’s not a guarantee.  A staggering 44% of cyber insurance claims are denied, often due to overlooked policy requirements or inadequate cybersecurity practices. To ensure your claim is honoured in the event of a breach, organisations must proactively ensure their security posture meets their insurer’s expectations.

Why Claims Fail

Astra Security reports that 27% of data breach claims and 24% of first-party claims are denied due to exclusions in the insurance package. These exclusions often stem from outdated security models, misconfigurations, or failure to meet minimum protection standards.

Moreover, 60% of claims involve Business Email Compromise (BEC) or Funds Transfer Fraud (FTF) — two attack vectors that insurers scrutinise particularly heavily. Ransomware, though less frequent, remains on average the costliest type of attack.

If your organisation lacks robust defences against these threats, your insurer may argue that you failed to uphold your end of the coverage agreement.

How to Ensure a Claim Isn’t Denied

1. Treat Data Transfers Like Cash Transfers

Data — like cash — is a high value asset vulnerable to theft, loss, and misuse.  Treating data transfers with the same rigor as cash helps ensure accountability, security, and compliance.

In today’s digital economy, customer records, intellectual property, financial details, and operational insights are all assets that drive business decisions and revenue. Just as companies protect cash transfers with encryption, audit trails, and multi-party verification, data transfers should be governed by similarly strict protocols.

The Australian Cyber Security Centre (ACSC) emphasises that users must be held accountable for all data transfers they perform, especially when moving sensitive or classified information between systems. This mirrors financial accountability, where every dollar moved is tracked, verified, and reconciled

2. Implement and Maintain Strong Cybersecurity Controls

Insurers expect you to uphold basic security hygiene. This usually includes:

·         firewalls and endpoint protection,

·         Multi Factor Authentication MFA,

·         up-to-date patching,

·         incident response plans,

·         periodic vulnerability assessments, and

·         employee training on phishing and social engineering.

One particular technology — Managed File Transfer (MFT) — can help you embed technical and process protections across your organisation in one fell swoop.

MFT provides end-to-end encryption, role-based access controls, built-in audit trails, detailed reporting, automated alerts and notifications, centralised visibility and seamless scaling across both cloud and on-premises systems.

3. Understand Your Policy Details

Read the fine print of your insurance policy. Know what’s covered, what’s excluded, and exactly what security standards and regimes you’re expected to maintain.

4. Document Everything

Keep detailed records of your cybersecurity efforts. This includes security audits and penetration tests, software update logs, employee training sessions and incident response drills.

Documentation is your best legal defence if a claim is challenged. It proves you took reasonable steps to mitigate risk.

5. Stay Ahead of Threats

Cyber threats evolve rapidly. Insurers are increasingly using AI to assess risk, and attackers are doing the same. Regularly update your risk models and consider continuous penetration testing to identify and patch vulnerabilities before they’re exploited.

6. Get Local Expert Help

Cyber insurance is not a substitute for cyber security — it’s a complement. And, as the old maxim states: “an ounce of prevention is worth a pound of cure”.

At Generic Systems Australia we have decades of experience helping Australian and New Zealand organisations bolster their cyber defences through deployment of the world’s leading MFT solution, GoAnywhere.

Our Migration Service makes the transition even easier for organisations who want to supplement their IT team with local expertise.  We can even write custom Cloud Connectors to extend GoAnywhere’s ability to interface seamlessly with less common cloud platforms.

If you’d like a no-cost, no-obligation discussion about how we could help you simply and affordably adopt an advanced MFT solution, please feel welcome to get in touch with me.

At Generic Systems Australia, we’re your local experts in Secure Managed File Transfer.