Cyber Insurance Best Practices
Cyber Insurance Best Practices
Cyber Insurance Best Practices: Strengthen Coverage with Cybersecurity
Meta Desc: Cyber insurance best practices don’t stop at policy paperwork. Learn how to pair insurance with smart cybersecurity measures to build stronger protection.
Relying solely on a cyber insurance policy used to be enough. But today? Not even close. Cybercriminals are sharper, faster, and increasingly targeting Australian businesses. That’s why cyber insurance best practices now go beyond policies and premiums. Take the ransomware incident at McDowall Affleck, a WA engineering firm, which lost nearly 470GB of sensitive data to attackers. Or consider the 67,500 cybercrime reports tallied across Australia in just one year, only in the 2020–21 financial year.
We’ve seen substantial financial and data losses recently, proving insurance can't physically stop an attack; it’s there for the aftermath. So yes, your cyber insurance policy is one crucial layer of your defence. But not the entire fortress. Many insurers, including us at SherpaTech, increasingly look for evidence of solid cybersecurity measures before providing cover.
We expect you to show real-world protection measures, like threat detection, tested backups, and incident response plans. If those aren’t part of your operations, premiums may spike or coverage may narrow.
That’s why we teamed up with the cybersecurity services at Interscale to walk you through a set of 7 cybersecurity insurance best practices for 2025 here. All to help you strengthen your defences and avoid seeing your premiums climb due to preventable gaps.
Best Practice 1: Regular Penetration Testing
The value of penetration testing lies in catching your system’s blind spots before someone else does. These simulated attacks put your infrastructure to the test. The main goal is to reveal vulnerabilities you may never have known existed.
Why is this a big deal for your cyber insurance? Well-documented, regular penetration testing shows insurers you're serious about your security posture. Addressing the findings from these tests makes actual breaches far less likely. Of course, this means fewer claims. The next step? Schedule these tests at least annually or after any significant system changes.
Best Practice 2: Robust Email Security & Anti-Phishing Measures
Email remains one of the easiest ways in, and phishing scams still dominate. That’s why email security isn’t optional. We’re talking advanced filtering, sender authentication (like DMARC and SPF), and scanning links for malicious content. These measures are designed to protect your business from common attacks such as phishing, malware, and those tricky impersonations.
ReliaQuest report shows the construction sector is no stranger to phishing attacks, which topped the list of initial access techniques between October 1, 2023, and September 30, 2024. For example, spear phishing links are at 19% of incidents. Ransomware remains the biggest threat to the sector, as demonstrated by the 41% rise in organisations appearing on data-leak sites over the past year. Yup, it’s not just IT’s problem. It’s a business risk with financial consequences.
Given that a large percentage of breaches in Australia involve phishing, insurers want to see that you’re actively blocking these threats. Effective email security and protection can prevent incidents like Business Email Compromise (BEC) scams, which could otherwise lead to significant insurance claims.
Best Practice 3: Consistent Security Awareness Training
Training your team to recognise risks, such as phishing, dodgy downloads, and weak passwords, is still one of the most underrated ways to harden your defence. Why? Because you can deploy the best tools, but your people still make the final click. Yes, your employees are a vital part of your cyber defence. But they can also be a vulnerability if not properly trained.
So, a workforce that understands these risks is your first line of active prevention. It’s not a theory. Many reports show cyber breaches trace back to human error. We at SherpaTech also see this pattern all too often in post-incident reviews. That’s why it’s something insurers care about.
Insurers look very favourably on businesses that invest in training their staff because it demonstrably reduces IT risk. If your team can recognise social engineering tactics or report unusual activity promptly, many potential claims might never even materialise. The next step is to implement regular training. Interscale, for example, offers IT security awareness training tailored for employees.
Best Practice 4: Multi-Factor Authentication & Solid Access Controls
Multi-factor authentication (MFA) requires users to verify themselves using more than just a password. Meanwhile, access controls make sure users only touch what they’re authorised to. This MFA and access control help you secure who can get in, and what they can see once they’re in.
Why is this so important for your cyber insurance strategy? User accounts are a prime target for attackers. Even if a password gets compromised, MFA can stop an unauthorised login in its tracks. From an insurance standpoint, these controls are increasingly seen as table stakes. Insurers often list MFA as a key cyber insurance requirement. Without them, even the best policy might not respond favourably in a breach scenario.
Best Practice 5: Reliable Data Backup & Ransomware Recovery Plan
Reliable data backup and ransomware recovery help you get automated backups and store them in isolated environments. All to make sure you don't lose all your critical business data. We all know, ransomware has evolved into a business disruptor. One wrong click and the entire project file could vanish.
Many insurers now make this a protection policy requirement. Why? Because it’s cheaper to recover from a backup than to pay a ransom. And your insurer is more likely to cover the cleanup costs rather than extensive data loss claims. The next step involves implementing an automated backup strategy.
Best Practice 6: Threat Detection & Incident Response
Threat detection and incident response are a core part of any good cyber insurance strategy. Here we talked about setting up continuous monitoring and having a formal Incident Response (IR) plan.
As a first step, you will use tools like Security Information and Event Management (SIEM) or Endpoint Detection and Response (EDR) for early threat detection. Then, an IR plan clearly outlines who does what during an attack. This means covering notification procedures, containment steps, and recovery processes.
At SherpaTech, we’ve seen that businesses with strong response frameworks suffer less downtime, fewer regulatory issues, and more favourable claims outcomes. That's why you can consider Interscale cybersecurity service for managed security monitoring or to help develop your IR plan.
Best Practice 7: Comprehensive Risk Assessment
A comprehensive IT risk assessment involves regularly auditing your network and systems. This includes vulnerability scans, ensuring your patch management is up to scratch, and reviewing your security policies. The goal is to identify and rank your cyber risks and weak points so you can address them systematically.
Why is this one of our cyber insurance tips? Knowing your vulnerabilities allows you to fix them before they become a problem or an issue for your insurer. For example, at SherpaTech, we expect your businesses to conduct and document these risk assessments. So, it’s not just due diligence anymore. It’s part of a solid cyber insurance strategy.
And Finally!
If there’s one thing to take away, it’s this: cyber insurance best practices aren’t just a formality. They’re the connective tissue between coverage and control. Having a SherpaTech policy gives you a safety net. But pairing it with active defences is what truly protects your reputation, clients, and bottom line.
Australian businesses, especially in high-pressure industries like AEC, can’t afford to treat cybersecurity as a side task. That’s why we recommend combining SherpaTech’s tailored insurance solutions with Interscale’s advanced cybersecurity service. Their work in threat detection, employee training, and ransomware recovery directly reduces the risk of needing a claim.
When insurers, regulators, and even clients start asking the hard questions, you’ll be ready. Not just covered, but secured.