Cyber Insurance Requirements Explained for UK Businesses

If your business has between 10 and 200 staff, you sit in a tricky middle ground: big enough to be interesting to attackers, small enough that a cyber incident could sink productivity and reputation quickly. That’s where cyber insurance often comes into play. This article explains, in plain English, what insurers typically require from UK businesses and what that means for boardrooms, managers and IT teams — with a focus on business impact rather than technical minutiae.

What is cyber insurance and why it matters

Cyber insurance is a commercial policy that helps cover costs following a cyber incident: data breaches, ransomware, business interruption, legal fees and sometimes reputation management. It isn’t a magic wand — it won’t stop attacks — but it can reduce financial shock, provide access to expert incident response and buy time to recover. For UK businesses handling customer data, payroll info or supplier contracts, it’s increasingly a business continuity tool rather than a luxury.

How insurers assess risk: the practical basics

Insurers don’t want to underwrite chaos. They’re looking for evidence that you’re making sensible, proportionate steps to reduce the chance and impact of an incident. That evidence usually comes in the form of a questionnaire, supporting documents and occasionally a security review. Here are the common expectations you’ll face and what they actually mean for you.

Multi-factor authentication (MFA)

MFA for remote access and for admin accounts is almost always on the checklist. In plain terms: if people can log into critical systems with a single password, that’s a red flag. Where practical, roll MFA out for email, VPNs and cloud admin consoles.

Patch management and device hygiene

Insurers expect you to keep systems and software reasonably up to date. That doesn’t mean an overnight transformation — it means documented patching processes, prioritized updates for critical systems and a record that updates actually happen.

Backups and disaster recovery

Working backups stored offline or isolated from primary systems are crucial. Insurers will want to see frequency, testing and that backups are protected from the same attack vectors (for example, ransomware).

Endpoint protection and logging

Simple endpoint protection, centralised logging and basic detection help. You don’t need enterprise-grade tools to start; you need records that you have controls and you check them.

Policies, training and human factors

Human error is the weak link. Evidence of staff training, phishing simulations and clear incident escalation routes will strengthen your position. Insurers like to see an incident response plan — even a straightforward one that names who calls whom, and who talks to regulators and customers.

Regulatory context for UK businesses

Two things to remember in the UK context. First, data protection rules mean you may have notification obligations: under UK GDPR, relevant breaches must generally be reported to the Information Commissioner’s Office (ICO) without undue delay and, where feasible, within 72 hours. Second, guidance from the National Cyber Security Centre (NCSC) and the ICO is increasingly referenced by insurers as a measure of reasonable care. Showing you follow recognised guidance helps.

What policies usually cover — and what they often don’t

Coverage varies a lot between insurers and products, so the policy wording is the important bit, not the sales brochure. Commonly covered items include:

• Forensic investigation and incident response costs
• Notification and credit monitoring costs for affected individuals
• Legal and regulatory advice
• Business interruption losses resulting from a cyber incident
• Ransom payments in some policies (with conditions)

Common exclusions or limitations to watch out for:

• Known or pre-existing incidents that weren’t disclosed at application
• Deliberate illegal acts by directors or employees
• Some policies limit or exclude regulatory fines — check the wording carefully
• Acts of war or state-sponsored attacks may be treated differently or excluded

The practical takeaway: don’t assume every cost will be covered. Test the policy with specific scenarios that matter to your business and get those answers in writing.

How underwriting affects price and terms

Premiums and excesses reflect perceived risk. Factors that typically push cost up include handling sensitive personal data, previous claims, weak controls, high dependence on a single supplier or old legacy systems. Things that reduce cost or improve terms include documented controls, routine training, tested backups and a tidy supply chain. The presence of a clear incident response plan and recent tabletop exercises can move discussions in your favour.

Getting ready for an insurer assessment: a practical checklist

Before you pick up the phone or start the questionnaire, do the following. It saves time, avoids surprises and often reduces premium.

• Document your user access controls and show MFA where it’s important.
• Keep a simple inventory of critical systems and where sensitive data lives.
• Have backup procedures documented and show the last successful test.
• Draft (and practise) an incident response plan and note who has authority to act.
• Run basic staff awareness sessions and record attendance.
• Collect evidence of patching and endpoint protection — screenshots or reports work fine.

Negotiation and wording: read the small print

It’s tempting to buy quickly and tick a compliance box. Resist that urge. Two businesses with similar controls can be offered materially different wordings. Look for clarity on definitions (what counts as a cyber incident), timing (limits on investigation windows) and exclusions (especially around regulatory fines and nation-state activity). Often, the most useful improvements come from negotiating specific clauses rather than chasing a lower premium.

When a claim happens: expectations and behaviour

If you have to make a claim, rapid, calm communication is vital. Insurers will typically expect immediate notification, cooperation with forensic teams and honest disclosure of facts. An organized response often reduces overall cost and disruption. From my experience working with mid-sized UK firms, the businesses that recover fastest are those that prepared the documents and named the decision-makers before the incident.

Key questions to ask an insurer or broker

When reviewing policies, ask:

• Exactly what is and isn’t covered in plain language?
• Are regulatory fines covered or excluded?
• What evidence do you need to support a claim?
• How quickly will an incident response team be appointed?
• What excess applies to each type of cover?

FAQ

Do I need cyber insurance if I already have general liability cover?

Probably. General liability usually doesn’t cover cyber-specific losses such as forensic costs, incident response, notification or cyber business interruption. Cyber policies are designed for digital risks and often include services that general liability won’t provide.

Will insurers pay ransom demands?

Some policies can cover ransom payments, but they often come with strict conditions and approval processes. Because this area is complicated and evolving, treat any ransom discussion as a last resort and get legal and insurance guidance promptly.

How much does cyber insurance cost for a business my size?

There’s no one-size-fits-all figure — premiums depend on sector, turnover, data sensitivity, past claims and your security controls. Better controls and clear documentation usually reduce premiums and improve terms.

Can I get refused cover because of remote working?

Not automatically. Insurers are interested in how remote work is managed: secure access, MFA, device controls and staff training. Demonstrate that remote arrangements are governed and monitored and you’ll be in a much stronger position.

How often should I review my cyber insurance?

At least annually, and whenever you change business systems, move to new cloud services or significantly change your workforce. An annual review keeps sums insured accurate and ensures your wording still fits your risk profile.

Final thoughts

Cyber insurance is a risk transfer tool, not a substitute for sensible security and planning. For UK businesses with 10–200 staff, the best approach is pragmatic: put reasonable controls in place, document them, practise your response and read the policy wording closely. That way you’ll reduce the chance of an incident, shorten recovery time and avoid surprises when you need cover.

If you want the outcomes that matter — less downtime, lower unexpected costs, stronger credibility with customers and a calmer leadership team — start by checking your controls, practicing your response and making sure the policy actually covers the losses that would hurt your business most.