Cyber Insurance in 2025 – Why It’s Essential and How to Get It Right

Special thanks for assistance with this article to
Aaron Pollock
NPB Advisors/intouch Insurance Services
aaron@npbadvisors.com
(206) 941-6484

Why Cyber Insurance Is No Longer Optional

Through the use of Artificial Intelligence cyber threats are evolving faster than ever. In 2024 alone, cybercrime was projected to cost the world $9.5 trillion[1]. From ransomware and business email compromise (BEC), to funds transfer fraud (FTF), the financial and operational risks can be staggering. Cyber insurance helps mitigate these risks by covering:

• Incident response and recovery
• Legal and regulatory costs
• Ransomware payments
• Business interruption losses

Understanding the Cyber Insurance Application

The process of applying for Cyber Insurance can be detailed and cumbersome. During the underwriting process the insurance carriers are evaluating the risk associated with issuing a policy to a particular business. The answers to the application questions need to be honest and clear as the application becomes part of the actual policy. Some, but not all, of the questions include:

• Are the employees trained to recognize cyber threats and respond accordingly?
• Do you use Multi Factor Authentication (MFA) for all remote access and admin accounts?
• Are backups encrypted and stored offline?
• Do you conduct annual penetration testing?
• Are there procedures to protect financial transactions?
• What endpoint protection tools are in place?
• Do you have a documented incident response plan?

Case Studies: What Real Claims Look Like

According to Coalition’s 2025 Cyber Claims Report [1]:

• 60% of claims involved BEC or funds transfer fraud (FTF)
• Average BEC loss: $35,000 (up 23% YoY)
• Average FTF loss: $185,000
• Ransomware accounted for 21% of claims but remains the most disruptive.

The Role of Professional IT Management

Whether you have an internal IT team or partner with a Managed Service Provider (MSP) like Ariel IT, professional IT management is crucial. IT management provides:

• Compliance: MSPs help ensure you meet insurer requirements.
• Monitoring: 24/7 threat detection and response.
• Documentation: Proper record-keeping for audits and claims.
• Expertise: Staying ahead of evolving threats and technologies.

Ariel IT specializes in helping businesses align their cybersecurity posture with insurance requirements—so you’re not just protected, you are protecting your business and you’re insurable.

Terrorism and Cyber Coverage

Recent high-profile events have highlighted some of the motivations behind both physical and cyber-attacks. Individuals, multi-national organizations, and even nations are perpetrating hostile actions. If law enforcement labels an incident as terrorism, some policies may exclude coverage under “acts of war or terrorism” clauses.

To protect your business:

• Review your policy’s exclusions
• Ask about terrorism coverage add-ons
• Ensure your provider offers clarity on definitions

Final Thoughts: Be Prepared, Be Protected

Cyber insurance is a vital part of your business continuity plan—but it’s only effective if paired with strong cybersecurity practices. By working with a trusted MSP like Ariel IT and staying informed about insurer expectations, you can reduce your risk, lower your premiums, and ensure peace of mind.