From Static Questionnaires to Real-Time Risk Visibility: The Next Evolution in Cyber Insurance
Cyber insurers face a critical visibility gap. Traditional underwriting relies on self-reported questionnaires and point-in-time audits that quickly become outdated. Once a policy is issued, insurers have little to no insight into whether policyholders continue to meet baseline security requirements.
That gap creates risk on both sides: insurers may end up paying claims for breaches that occur during periods of non-compliance, and policyholders may miss opportunities to fix security gaps before they become costly incidents.
A Cyber Governance Platform changes this dynamic by replacing static snapshots with continuous, automated policy compliance monitoring.
The Cyber Insurance Visibility Problem
Cybersecurity environments are in constant flux. A company that meets all requirements at policy inception can drift out of compliance in days or weeks—a missed patch, a misconfigured server, or unprotected remote access can create new vulnerabilities.
Without ongoing visibility, insurers often discover these lapses only after an incident occurs. This leads to higher loss ratios, more disputed claims, and less regulatory defensibility.
Real-World Example: City of Hamilton, Ontario
In early 2024, a ransomware attack disabled roughly 80% of Hamilton’s network, disrupting essential services like business licensing, transit, and finance. While the city refused to pay the roughly CAD 18.5 million ransom and brought the incident under control within two days, the aftermath was devastating.
The insurer denied Hamilton’s claim—citing the absence of full multi-factor authentication (MFA) as a policy exclusion. As a result, taxpayers are on the hook for CAD 18.3 million in recovery costs.
This incident illustrates the high stakes of failing to meet policy requirements—and underscores why real-time visibility into security posture can no longer be optional.
(Link to article: https://www.it-daily.net/en/shortnews-en/canadian-city-must-pay-18-3-million-for-cyberattack)
How Real-Time Governance Works
A Cyber Governance Platform allows insurers to embed their own policy requirements directly into automated governance frameworks. Once activated by the policyholder, the platform continuously monitors the insured’s environment, sends alerts when requirements aren’t met, and generates reports for both parties.
This provides real-time posture data for underwriting decisions, risk mitigation, and—if necessary—claim validation or denial.
Benefits to Insurers
Cyber Governance Platforms give insurers real-time visibility into whether policyholders are meeting baseline security requirements. This proactive approach reduces claims exposure, strengthens underwriting, and enables differentiation in a crowded market.
- Reduce Loss Ratios: Detect and address non-compliance before incidents occur
- Data-Backed Claim Decisions: Defensible evidence if requirements weren’t met
- Differentiate Policies: Offer governance-backed coverage
- Regulatory Confidence: Demonstrate continuous oversight
Benefits to Policy Holders
By integrating with their insurer’s governance framework, policyholders gain clear guidance, automated compliance tracking, and faster detection of security gaps. The result is less manual effort, stronger protection, and potential rewards for maintaining a robust cyber posture.
- Automated Compliance Tracking: Reduce audit workload
- Clear Requirements: Easy to understand and implement
- Faster Remediation: Tackle issues as they emerge
- Premium Incentives: Rewards for sustained compliance
The Bottom Line
The City of Hamilton incident is a stark reminder: even a basic lapse—like lack of MFA—can trigger claim denial and massive financial fallout. Cyber insurers have a clear opportunity to improve risk management by adopting real-time governance. Both insurers and policyholders benefit from stronger posture, fewer surprises, and claims handled more confidently.
