Cyber Insurance Requirements Have Changed: What BC Businesses Need for Coverage in 2026

Three years ago, getting cyber insurance was straightforward. Complete a brief questionnaire, pay the premium, receive coverage. Most carriers asked basic questions about backups and antivirus software but didn’t deeply scrutinize security practices.

That’s changed dramatically.

In 2026, cyber insurance underwriting resembles D&O or E&O insurance: detailed applications, security assessments, sometimes on-site verification, and renewal terms that depend heavily on your security posture and claims history.

For professional services firms in BC—especially law firms, financial advisors, and architecture practices handling sensitive client data—understanding current cyber insurance requirements isn’t optional. It’s the difference between coverage and denied claims, between reasonable premiums and unaffordable rates.

Here’s what’s changed, why it matters, and how to meet the new requirements without transforming into a cybersecurity expert.

Why Cyber Insurance Requirements Tightened

The insurance industry experienced massive losses from ransomware claims between 2020-2024. Payouts increased 400% while the frequency of claims doubled. Basic cybersecurity hygiene failures—missing patches, no multi-factor authentication, inadequate backups—created insured losses that exceeded actuarial models.

Carriers responded by tightening requirements, raising premiums, and in some cases exiting the cyber insurance market entirely.

The result: cyber insurance today requires demonstrating security controls rather than just purchasing coverage.

For professional services firms, this creates both challenge and opportunity. The challenge is meeting technical requirements without dedicated security staff. The opportunity is that firms implementing proper controls qualify for significantly better rates and coverage terms.

A Victoria law firm we worked with saw their cyber insurance premium drop from $18,500 to $4,200 annually after implementing documented security controls. Same coverage, same carrier. The difference was demonstrating MFA, backups, security training, and incident response planning rather than just claiming to have them.

That’s an $80,000 savings over five years for security improvements that also materially reduced their actual risk. Not a bad return.

The Five Universal Requirements

Every major cyber insurance carrier now requires these five baseline controls. Without them, you can’t get coverage at any price:

1. Multi-Factor Authentication (MFA)

Every carrier requires MFA on all remote access and administrative systems.

Specifically, insurers want to see MFA on:

• Email systems (Microsoft 365, Google Workspace)
• VPN and remote desktop access
• Administrative accounts with elevated privileges
• Cloud storage and file sharing
• Practice management and line-of-business applications with remote access

“We have MFA available” doesn’t count. Carriers want MFA enforced—users cannot opt out.

During underwriting, expect detailed questions:

• Which systems have MFA enabled?
• What authentication method? (App-based is preferred over SMS)
• What percentage of users have MFA active?
• Can users bypass MFA? (The answer must be no)

Most carriers now verify MFA implementation by requesting screenshots of security policies or admin console configurations. They’re not taking your word for it.

Implementation reality: Enabling MFA across all systems takes 2-3 weeks for a typical 15-person firm. The technical work is straightforward—the challenge is user adoption and change management. Budget time for training and troubleshooting initial login issues.

2. Tested, Offline Backups

“We have backups” used to be sufficient. Now carriers want proof of offline or immutable backups that ransomware can’t encrypt.

Requirements include:

• Daily automated backups of all business-critical data
• Offline or air-gapped backup copy (physically disconnected or immutable cloud storage)
• Quarterly restoration tests with documentation
• Written backup retention policy (usually 30+ days)

Carriers increasingly request backup test reports as part of underwriting. Expect questions like:

• When did you last test backup restoration?
• How long does full restoration take?
• Can ransomware encrypt your backups? (If yes, coverage is denied)

A Kelowna financial advisory firm had their claim denied after a ransomware incident because their “cloud backups” were on the same Microsoft 365 tenant as their production data. The ransomware encrypted both. Their backup solution didn’t meet the carrier’s offline requirement, even though the firm genuinely believed they were protected.

Implementation reality: Air-gapped backups require either manual processes (weekly USB drive rotations) or specialized backup software with immutable storage capabilities. Budget $2,000-$4,000 for proper backup infrastructure plus $100-$200 monthly for cloud immutable storage.

3. Security Awareness Training

Carriers recognize that humans are the weakest link. They want documented evidence of regular security training.

Requirements include:

• Formal security awareness training for all employees
• Training delivered at least annually (quarterly is increasingly preferred)
• Phishing simulation testing
• Training completion tracking and documentation
• New employee security orientation

During renewal, expect to provide:

• Training completion reports showing percentage of staff trained
• Recent phishing simulation results
• Security policy acknowledgment records

This isn’t about checking a box. Carriers analyze phishing simulation failure rates and may decline coverage or increase premiums if too many employees are clicking malicious links.

One Vancouver law firm saw their premium increase 40% at renewal after phishing simulations showed 35% of staff clicking test attacks. After implementing quarterly training and reducing click rates to 8%, their next renewal came in 15% below the original quote.

Implementation reality: Security training platforms cost $3-$8 per user monthly. Budget 1-2 hours quarterly for training sessions. The investment pays for itself in premium reduction and actual risk reduction.

4. Endpoint Detection and Response (EDR)

Traditional antivirus is no longer sufficient. Carriers require endpoint detection and response tools that can identify and stop sophisticated threats.

EDR requirements:

• Modern endpoint protection on all devices (workstations, laptops, servers)
• Centrally managed and monitored
• Automated threat response capabilities
• Regular definition and software updates

“We have Windows Defender” or “Our antivirus is up to date” doesn’t meet EDR requirements. Carriers want enterprise-grade protection with threat intelligence, behavioral analysis, and 24/7 monitoring.

Questions during underwriting:

• What EDR product do you use?
• Who monitors alerts?
• What’s your response time for security alerts?
• Are all devices protected, including remote workers?

This is where many small professional services firms struggle. Implementing and monitoring EDR requires expertise that most firms don’t have in-house.

Implementation reality: EDR software costs $5-$15 per device monthly. But the real cost is monitoring and response. If you can’t watch security alerts 24/7 and respond to threats, you need a managed security services provider. Budget $200-$500 monthly for managed EDR for a 15-person firm.

5. Incident Response Plan

Carriers want documented processes for handling security incidents.

Your incident response plan should address:

• Who’s responsible when a security incident occurs?
• How do you contain the incident?
• Who do you notify? (IT provider, insurance carrier, clients, regulators)
• How do you preserve evidence?
• What’s your communication protocol?

The plan doesn’t need to be 50 pages. A 3-4 page document covering key response steps, contact information, and decision authority is sufficient.

But you need to actually have one, and your team needs to know where it is.

Carriers may request:

• Copy of your incident response plan
• Evidence of annual review/updates
• Documentation of tabletop exercises (walk-throughs of the plan)

Implementation reality: Creating a basic incident response plan takes 4-6 hours with IT and management input. Annual review takes 1-2 hours. Tabletop exercises take 2-3 hours. The investment is minimal compared to the confusion and poor decisions that occur during an actual incident.

Beyond the Baseline: Premium Reduction Opportunities

Meeting the five baseline requirements qualifies you for coverage. Going beyond them qualifies you for better rates.

Additional controls that reduce premiums:

Email security beyond basic filtering: Advanced threat protection, link rewriting, attachment sandboxing. Microsoft Defender for Office 365 or similar tools demonstrate enhanced email security.

Network segmentation: Dividing your network into separate zones limits ransomware spread. Carriers recognize this as material risk reduction.

Privileged access management: Separate administrative accounts from day-to-day user accounts, restrict admin access, monitor privileged activity.

Vulnerability scanning and patch management: Regular security scanning and systematic patching of vulnerabilities show proactive security management.

Security operations center (SOC) monitoring: 24/7 security monitoring and threat detection significantly reduces premiums—often by 20-30%.

A 22-lawyer firm in New Westminster reduced their cyber insurance premium by $6,400 annually by implementing network segmentation and adding 24/7 SOC monitoring through their managed IT provider. The additional IT cost was $3,200 annually, creating a net $3,200 benefit before considering the actual security improvement.

The Application Process: What to Expect

Current cyber insurance applications range from 8-15 pages of detailed technical questions. Gone are the days of simple yes/no questionnaires.

Expect to provide:

Infrastructure inventory: Number of employees, devices, servers, cloud services, third-party access.

Security controls detail: Specific products and configurations for MFA, EDR, email security, backup, network security.

Claims and incident history: Past security incidents whether or not they resulted in insurance claims.

Revenue and data sensitivity: Business revenue, types of data stored, regulatory requirements.

Third-party assessments: Some carriers require external security assessments, penetration testing, or vulnerability scans.

The underwriting process now takes 3-6 weeks versus 3-6 days previously. Carriers are conducting thorough due diligence rather than rapid approvals.

For renewal, you’ll need to update all this information annually and provide evidence of continued compliance with security requirements.

What Happens If You Don’t Meet Requirements?

If you can’t demonstrate required security controls, you have three options:

1. Coverage denial. Many carriers simply won’t write policies for firms lacking baseline controls.

2. Reduced coverage. Some carriers offer limited policies excluding ransomware or reducing coverage limits if you can’t meet full requirements.

3. Premium loading. If a carrier does offer coverage despite missing controls, expect dramatically higher premiums—often 200-400% of standard rates.

None of these are attractive options.

More concerning: if you misrepresent your security controls during application and later file a claim, carriers can deny coverage based on material misrepresentation. “We thought we had MFA enabled” isn’t a defense if the application claimed universal MFA deployment.

This isn’t theoretical. I’m aware of three BC firms in the past 18 months that had ransomware claims denied due to gaps between stated security controls and actual implementation. In each case, the firm believed they met requirements but didn’t understand the specific technical implementation details carriers were asking about.

The Canadian Regulatory Context

Beyond insurance requirements, BC professional services firms face regulatory security obligations:

PIPEDA requires “appropriate safeguards” for personal information. The Privacy Commissioner increasingly interprets this standard based on industry best practices—which now include MFA, EDR, security training, and tested backups.

Law Society of BC requires lawyers to protect client confidentiality, including implementing reasonable security for electronic data.

MFDA and IIROC impose specific cybersecurity requirements on financial advisors.

The practical reality: implementing security controls to meet cyber insurance requirements simultaneously addresses most regulatory requirements. You’re not implementing two separate security programs—you’re meeting overlapping obligations with a single set of controls.

Bonus: if you experience a breach, demonstrating that you maintained industry-standard security controls (MFA, EDR, training, etc.) significantly reduces regulatory sanctions and professional liability exposure.

Implementation Roadmap

Here’s a practical 90-day roadmap for meeting cyber insurance requirements:

Weeks 1-2: MFA deployment

• Enable MFA on email and cloud services
• Enforce MFA for all remote access
• Train users on MFA authentication

Weeks 3-4: Backup enhancement

• Implement air-gapped backup solution
• Test backup restoration
• Document backup procedures

Weeks 5-8: EDR and monitoring

• Deploy enterprise EDR solution
• Establish monitoring and response process
• Connect to managed security services if needed

Weeks 9-10: Security training

• Launch security awareness program
• Conduct initial phishing simulations
• Schedule quarterly training calendar

Weeks 11-12: Documentation and incident response

• Create incident response plan
• Document security policies
• Conduct tabletop exercise

By week 12, you’ll have implemented all baseline requirements and gathered documentation for insurance underwriting.

The Real Cost Question

“This sounds expensive. What’s the actual investment?”

For a typical 15-person professional services firm:

Initial implementation: $12,000-$18,000

• EDR software and deployment
• MFA licensing and configuration
• Backup infrastructure upgrade
• Security training platform
• Incident response planning

Ongoing monthly costs: $800-$1,200

• Managed EDR monitoring
• Security training subscriptions
• Backup storage and testing
• Quarterly security assessments

Compare this to typical cyber insurance premiums:

Without proper controls: $15,000-$25,000 annually With documented controls: $4,000-$8,000 annually

The premium difference ($7,000-$17,000 annually) subsidizes or fully covers the security investment. Over five years, you save $35,000-$85,000 in premiums while dramatically reducing actual risk.

The math strongly favors implementing proper security controls rather than paying elevated premiums for inadequate protection.

Your Next Step

If you’re approaching cyber insurance renewal or applying for new coverage, start by assessing your current security posture against carrier requirements.

Download our Small Business Cybersecurity Assessment Guide to evaluate your readiness across all five baseline requirements plus premium reduction opportunities.

Or schedule a consultation to discuss your specific situation and develop an implementation roadmap that meets insurance requirements while improving your actual security.

Cyber insurance isn’t optional for professional services firms. Neither are the security controls required to obtain coverage. The good news: implementing proper security is more affordable than you think—and far cheaper than trying to insure inadequate security.

---

Warren Turner is CTO at Autimo Core, specializing in IT security for professional services firms. He works with BC firms on security implementations that meet cyber insurance requirements while addressing PIPEDA, Law Society, and MFDA/IIROC obligations.