Revealed: Incident Response Planning Linked to Fewer Cyber Insurance Claims
New research from Marsh McLennan’s Cyber Risk Intelligence Centre (CRIC) has uncovered a direct correlation between proactive cyber incident response planning and a reduced likelihood of filing insurance claims following a breach. The study, titled “Cybersecurity Signals: Connecting Controls and Incident Outcomes,” reveals that organizations conducting regular tabletop exercises and breach simulations are 13% less likely to suffer a material cyber event compared to those that do not. This finding, based on an analysis of thousands of self-assessments and claims data, positions incident response planning as the fourth most effective security control in mitigating breach-related claims, underscoring its role in enhancing overall cybersecurity resilience. As cyber threats continue to escalate, these insights could reshape underwriting practices and encourage businesses to prioritize tested response strategies.
Key Findings from the CRIC Study
The CRIC report examined the impact of 12 core security controls commonly evaluated by cyber insurers, drawing from Marsh’s Cyber Self-Assessment tool and historical claims records. Incident response planning emerged as a standout, not just for post-breach recovery but for fostering proactive behaviors that prevent incidents altogether. Businesses with regularly tested plans demonstrated stronger implementation of day-to-day security measures, leading to fewer disruptions and claims. Tom Reagan, global cyber practice leader at Marsh McLennan, emphasized that while incident response has traditionally been seen as reactive, the data shows it drives “positive security behaviors and strong control implementations,” ultimately building organizational resilience.
Ranking of Top Security Controls
Among the 12 controls assessed, incident response planning ranked fourth in effectiveness for reducing breach-driven claims. The top performers were:
- Endpoint Detection and Response (EDR): Ranked first, this technology enables real-time threat detection and automated responses, significantly lowering the risk of escalation.
- Logging and Monitoring: Second place, highlighting the importance of continuous surveillance to identify anomalies early.
- Staff Awareness Training: Third, as phishing simulations and education empower employees to recognize and report threats, preventing many incidents at the human level.
These rankings reflect a shift in focus toward integrated, practical controls that insurers prioritize during risk assessments. The study notes that while cyber insurance has grown rapidly, claims remain a challenge, with proactive planning offering a tangible way to mitigate them.
Implications for Underwriting and Business Practices
The CRIC findings are poised to influence the cyber insurance market, one of the fastest-evolving segments in commercial coverage. Historically encouraged but not always mandated, detailed incident response plans may soon become a standard condition for policy issuance or a key factor in premium pricing and terms. Insurers could leverage this data to reward prepared organizations with broader coverage and lower rates, while brokers might advocate for clients to conduct drills and scenario testing to strengthen their negotiating position. As Reagan noted, “Investment in practical risk controls does not only improve resilience but also directly influences the availability and affordability of insurance protection.” This could lead to a more risk-based underwriting environment, where evidence of preparedness translates to cost savings.
Broader Context in the Cyber Landscape
Cyber incidents continue to pose significant challenges for businesses and carriers alike, with supply chain vulnerabilities and evolving threats like ransomware amplifying risks. The CRIC study builds on two years of data tracking, showing how controls like incident response planning address these issues head-on. Complementary research from sources like IBM’s Cost of a Breach analysis supports this, indicating that organizations with high levels of incident response planning save an average of $1.49 million and reduce containment time by 62 days. Only about 32% of companies currently have ready response plans, leaving many exposed to higher cleanup costs—up to 58% more without one. As regulators and insurers tighten requirements, businesses without robust plans may face ineligibility for top-tier policies or higher premiums.
Recommendations for Organizations
To capitalize on these insights, companies should integrate incident response planning into their core cybersecurity strategy. Start with developing a comprehensive plan that includes tabletop exercises at least annually, involving cross-functional teams for realistic simulations. Engage breach coaches or tools like NetDiligence’s Breach Plan Connect for customization and testing. Regularly update the plan to align with emerging threats and insurance policy terms, ensuring compliance with frameworks like those from the Department of Health and Human Services for protected health information. By doing so, organizations not only reduce claim likelihood but also enhance eligibility for favorable cyber insurance, turning preparedness into a competitive advantage.
Looking Ahead: A Call for Proactive Measures
As the cyber insurance market matures, the link between incident response planning and fewer claims highlights the value of prevention over reaction. Marsh McLennan’s research serves as a wake-up call for businesses to invest in tested strategies, potentially accelerating industry-wide shifts toward data-driven risk management. With cyber threats showing no signs of abating, organizations that prioritize these controls will be better equipped to navigate breaches, minimize financial impacts, and secure sustainable insurance coverage. Experts urge immediate action: Assess your current plan, test it rigorously, and consult with brokers to align with evolving underwriting standards.