Cybersecurity firm Sophos has released findings from its survey, Cyber Insurance and Cyber Defenses 2024: Lessons from IT and Cybersecurity Leaders.

According to the report, 97% of those with a cyber policy invested in improving their defenses to help with insurance, with 76% saying it enabled them to qualify for coverage, 67% to get better pricing and 30% to secure improved policy terms.

The survey also revealed that recovery costs from cyber-attacks are outpacing insurance coverage. Only one percent of those that made a claim said that their carrier funded 100% of the costs incurred while remediating the incident.

The most common reason for the policy not paying for the costs in full was because the total bill exceeded the policy limit. According to Sophos’ The State of Ransomware 2024 survey, recovery costs following a ransomware incident increased by 50% over the last year, reaching $2.73 million (£2.2mn) on average.

Chester Wisniewski, director, global field CTO, said: “The Sophos Active Adversary report has repeatedly shown that many of the cyber-incidents companies face are the result of a failure to implement basic cybersecurity best practices, such as patching in a timely manner.

“In our most recent report, for example, compromised credentials were the number one root cause of attacks, yet 43% of companies didn’t have multi-factor authentication enabled.

“The fact that 76% of companies invested in cyber defenses to qualify for cyber insurance shows that insurance is forcing organisations to implement some of these essential security measures.

“It’s making a difference, and it’s having a broader, more positive impact on companies overall. However, while cyber insurance is beneficial for companies, it is just one part of an effective risk mitigation strategy.

“Companies still need to work on hardening their defenses. A cyber-attack can have profound impacts for a company from both an operational and a reputational standpoint, and having cyber insurance doesn’t change that.”

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Across the 5,000 IT and cybersecurity leaders surveyed, 99% of companies that improved their defenses for insurance purposes said they had also gained broader security benefits beyond insurance coverage due to their investments, including improved protection, freed IT resources and fewer alerts.

“Investments in cyber defenses appear to have a ripple effect in terms of benefits, unlocking insurance savings that organisations can be diverted into other defenses to more broadly improve their security posture.

“As cyber insurance adoption continues, hopefully, companies’ security will continue to improve. Cyber insurance won’t make ransomware attacks disappear, but it could very well be part of the solution,” concluded Wisniewski.