No MFA, No Coverage!
In today’s threat landscape, cyber insurance seems not to be a given but rather a privilege. Without proper security controls, your organization may find itself ineligible for cyber coverage, leaving you exposed and without a critical safety net.
With the rising amount of ransomware attacks and data breaches, security requirements for cyber insurance have become more rigid. Nowadays, if your organization cannot demonstrate already having an adequate security posture before an incident occurs, then your claims may be limited or denied entirely.
In this blog, we’ll explore how failing to comply with cyber insurance standards can lead to major financial burden associated with remediating a ransomware attack, as well as the reputational damage your organization may suffer. We will also examine a cautionary real-world case study that underscores the importance of having strong security controls in place to guarantee cyber coverage, especially when your organization may need it most.
What Is Cyber Insurance & What Does it Cover?
Cyber insurance or cyber liability helps organizations pay and recover from financial losses in the event of a breach and/or attack.
However, this coverage is not automatic protection from threats and does not replace the necessary security controls. Your organization will not be covered unless it meets security requirements and actively maintains controls and processes to protect the data.
Cyber insurance often covers, but is not limited to:
- Data recovery
- System data repair
- Recovery of personal identities
Still, exclusions may apply and can vary depending on the circumstance at hand. A claim may be denied if it violates policy or if the event is deemed preventable. This can be seen through weak security practices, such as failing to implement basic security controls like multifactor authentication (MFA) or not addressing preexisting vulnerabilities through regular patching and updates.
The Need for MFA
With today’s rapidly evolving digital landscape, MFA has become more than just a recommended security measure, it’s now a critical requirement for obtaining cyber insurance coverage. Insurance providers increasingly view MFA as a foundational control that demonstrates a company’s commitment to cybersecurity best practices. By requiring users to verify their identity through multiple methods—such as a password combined with a mobile authentication app or biometric verification—MFA significantly reduces the risk of unauthorized access, data breaches, and other cyber threats.
As cyberattacks grow in frequency and sophistication, insurers are tightening their underwriting standards. MFA implementation is now considered part of a baseline set of reasonable controls that organizations must have in place to qualify for coverage. Without it, companies may face higher premiums, limited coverage, or even denial of insurance altogether. In essence, MFA is no longer optional, it’s a vital component of a robust cybersecurity strategy and a key factor in risk management and compliance.
Consider the 2024 data breach involving Ticketmaster and AT&T, where 1.24 billion records were exposed, partially due to inadequate MFA. According to a 2024 statistic reported by Trustle, “enabling MFA can block over 99% of automated account takeover attempts,” suggesting just how effective MFA is at reducing risk and protecting data.
On that note, let’s take a look at a recent CBC case study where the City of Hamilton in Ontario, Canada, was denied cyber insurance payment to cover $5M for claims of cyberattack, as a result of not having MFA consistently deployed within their systems.
Case Study & Highlights: The City of Hamilton’s Ransomware Attack
In February 2024, the City of Hamilton, Ontario suffered a severe ransomware attack with the main cause attributed, in part, to the lack of MFA across all systems. Due to this, the city has spent nearly $20M to date in damages and will continue paying for system recovery until November 2026.
About “80% of city systems were impacted,” and the attackers demanded ransom in exchange for the compromised data. In response, Hamilton refused and instead hired cybersecurity experts to help rebuild, improve, and increase security protection as well as efficiency within their networks.
Further, the lack of multi-factor authentication, and the denial of insurance coverage, was reported publicly for the first time this July. The staff report said: “According to the policy, no coverage was available under the policy for any losses where the absence of MFA was the root cause of a cyber breach.”
Key Takeaways
- The cost to remediate a ransomware attack along with reputational damage is significantly more expensive than implementing adequate controls proactively. When criteria is met and well applied, attacks are often avoidable or reduced in impact.
- As breaches become increasingly foreseeable, it’s critical to stay ahead. Organizations should not underestimate the importance of implementing proper security controls and ensuring fallback measures are in place to maintain coverage when it matters most.
- The strength of your security posture and the proactive steps taken by your organization to stay protected in today’s evolving threat environment are key factors to minimize cyber insurance premiums and ensure maximum coverage.
NEED MORE GUIDANCE? Contact our experts today to ensure your organization not only meets cyber insurance requirements but also sustains a strong security posture long-term.
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References
Image 1: Google Images
Image 2: Google Images
Cyber Insurance Coverage: https://www.fortinet.com/resources/cyberglossary/cyber-insurance
2024 Data Breach & Trustle Statistic: Sixty 2025 Cybersecurity Statistics
