Cyber insurance has shifted from a niche product into a complex market shaped by rising claims and stricter underwriting. Premiums are climbing for many UK businesses, not because of attack volumes but due to the way insurers now scrutinise technical controls and certifications. Here, Nathan Charles, head of customer experience at cyber security specialist OryxAlign, explains how the maturing insurance market is reshaping risk management, why premiums remain volatile and what leaders can do to prepare for the years ahead.
The cyber insurance market has grown into a fragmented environment with costs that vary widely by sector. A law firm with sensitive data but weak defences might face premiums at the top of the scale, while a retail business with strong certification can access more favourable rates.
The numbers are stark. Half of UK businesses reported a cyber breach in 2024, with median premiums for SMEs reaching between £11,500 and £55,000 depending on cover depth. Some of the most visible incidents, such as the M&S breach last year, saw insurers braced for claims running into nine figures, and those costs inevitably flow back into the wider market through higher renewal prices. Although Gallagher noted a modest decline in premiums towards the end of 2024, that dip was driven by pricing models rather than any drop in risk, and most businesses continue to feel pressure at renewal.
The underwriting environment itself has hardened. Insurers are no longer content with tick-box questions on application forms. Renewal processes now include audits, technical questionnaires and requirements for documented security measures. Some businesses are even declined cover they previously held. This signals a market that is still expanding in competition but is also tightening standards as knowledge deepens.
What insurers are really looking for
Behind the rising costs sits a checklist of controls that insurers now expect as standard. Multi-factor authentication, managed endpoint detection, tested backup systems, structured incident response plans and regular cyber awareness training have become entry points rather than differentiators. Organisations that fail to meet these expectations risk paying more or even invalidating their cover. For example, insurers often stipulate that if MFA is not enforced, a policy may be void, regardless of whether premiums have been paid.
Certification’s role
Cyber Essentials Plus and ISO 27001 accreditation carry weight during underwriting, since they demonstrate structured risk management and audited controls. Insurers increasingly demand not only the presence of these frameworks but also evidence that solutions used within them are certified to standards like SOC 2. This shift has created challenges for firms using niche or unrecognised tools, which may meet technical requirements but fall outside approved vendor lists maintained by insurers. The result is that insurance has become intertwined with operational cybersecurity. Premiums are shaped as much by investment in these controls as by the size or turnover of the company seeking cover.
Beyond premiums
For many businesses, the conversation doesn’t end with the insurance quote. Failing to meet minimum security standards creates risks that extend far beyond premiums. A breach without adequate safeguards can trigger regulatory investigation, reputational fallout and, in severe cases, the closure of the company. The Information Commissioner’s Office requires organisations to disclose data breaches, meaning failures become public and employees or customers may pursue further action.
This regulatory burden is set to increase. The Cyber Security and Resilience Bill will impose faster reporting timelines, potentially within 24 hours for initial disclosure and 72 hours for full reporting. Penalties for non-compliance are expected to rise sharply, with fines that could reach £100,000 per day.
At the same time, the UK government has announced a ban on ransomware payments by public bodies and critical infrastructure operators, alongside new requirements for private organisations to notify authorities before making any payment. These measures underline the shift from voluntary resilience to mandated accountability.
Taken alongside the financial toll of attacks, it’s clear that insurance on its own no longer offers enough protection. Businesses need to approach resilience as a whole, since regulatory demands and insurer requirements are now moving in the same direction.
Rethinking risk
The maturing insurance market has prompted some larger organisations to explore alternatives, such as self-insurance pools or holding capital reserves against breaches. In the UK, these remain rare, with SMEs in particular unable to lock away funds that could otherwise support growth. For most, cyber insurance remains the only realistic form of financial protection, and the challenge lies in meeting the conditions attached.
The most effective route is to view cyber insurance as one part of a layered defence. Firms that maintain an accurate risk register, show investment in progressive improvements and demonstrate clear timelines for strengthening controls place themselves in the best position to negotiate sustainable premiums. Insurers are more willing to back organisations that can show a roadmap of future measures, not only a snapshot of current compliance.
Looking ahead
The market is expected to move towards clearer segmentation, with premiums stabilising into tiered offerings that resemble traditional household or car insurance. A bronze level may offer limited protection for a lower cost, while higher tiers would demand full certification and comprehensive technical safeguards. Until that structure emerges, each renewal remains a more bespoke negotiation shaped by how seriously a business takes its cyber resilience.
The road forward
UK organisations now face a cyber insurance market that is both more sophisticated and more demanding. Rising premiums reflect not only the intensity of attacks but also the increasing expectations placed upon businesses by regulators and insurers. Those that treat cyber insurance as a one-off expense will struggle to secure cover on sustainable terms. Those that integrate insurance into a wider strategy of controls, certifications and risk management will find it easier to protect both their finances and their reputation.
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