If you run a 20–80 employee business in Canada and carry cyber insurance, here’s the reality:

Your insurer is now your IT auditor.

Over the past several years, cyber insurance requirements in Canada have shifted from basic IT hygiene questions to deep technical and governance scrutiny.

After 23+ years in Canadian managed IT services, and guiding mid-sized firms through underwriting reviews and renewals, I can say this confidently:

Most businesses believe they are compliant.

Many are not.

Let’s break down what changed after 2021, why claims are being denied, what insurers now expect, and what your company should implement immediately.

Why Cyber Insurance Requirements Tightened

The insurance market hardened because losses escalated dramatically.

IBM’s Cost of a Data Breach Report 2023 found that the average cost of a data breach in Canada reached $6.94 million CAD, among the highest globally [1].

At the same time, Verizon’s 2024 Data Breach Investigations Report (DBIR) found that 68% of breaches involved the human element, including phishing and credential misuse [2].

The Canadian Centre for Cyber Security continues to identify ransomware as one of the most disruptive threats facing Canadian organizations [3].

Insurers paid heavily during the ransomware surge from 2020 onward.

Underwriting adapted accordingly.

How Cyber Insurance Requirements in Canada Changed After 2021

Before 2021, applications often asked:

• Do you have antivirus?
• Do you back up your data?
• Do you use a firewall?

Today, insurers ask:

• Is Multi-Factor Authentication (MFA) enforced on all accounts?
• Do you use Endpoint Detection & Response (EDR)?
• Are backups immutable and tested?
• Do you actively monitor logs?
• Do employees receive security training?
• Do you maintain a documented incident response plan?

That’s not incremental change.

That’s structural reform.

Gartner research has noted that the cyber insurance market hardened significantly following ransomware-driven losses beginning in 2020–2021, leading to stricter underwriting and increased premiums [4].

The Minimum Controls Insurers Now Expect

Let’s make this practical. If you’re uncertain whether your current controls would satisfy an underwriter today, it’s better to assess proactively than during a renewal deadline. 

Not Sure If You Meet These Requirements?

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 To meet modern cyber insurance requirements in Canada, insurers now typically expect: 

1. Enforced Multi-Factor Authentication (MFA)

MFA must be enabled for:

• Microsoft 365 accounts
• VPN access
• Administrator accounts
• Remote desktop services
• Cloud platforms

Credential abuse remains one of the most common breach vectors [2]. Missing MFA is now viewed as unacceptable risk.

2. Endpoint Detection & Response (EDR)

Traditional antivirus is insufficient.

Insurers expect:

• Behavioral threat detection
• Centralized alerting
• Rapid isolation capability
• Managed monitoring

This is a shift from passive defense to active detection.

3. Secure and Immutable Backups

Backups must be:

• Encrypted
• Offsite
• Segregated from production credentials
• Regularly tested

Backups attackers can encrypt do not meet underwriting standards.

4. Logging & Monitoring

The Canadian Centre for Cyber Security emphasizes detection and monitoring as key mitigation strategies [3].

Insurers increasingly require:

• Centralized log retention
• Alert review processes
• Monitoring of privileged activity
• Documented response actions

If you cannot demonstrate monitoring, insurers view that as elevated risk.

5. Security Awareness Training

With 68% of breaches involving human factors [2], insurers expect:

• Ongoing employee training
• Phishing simulations
• Policy acknowledgment tracking

Security maturity now includes behavioural governance.

6. Documented Incident Response Plan

Underwriters may ask:

• Do you have a written incident response plan?
• Who owns it?
• When was it last reviewed?
• Have you tested it?

An undocumented plan is not considered sufficient.

Why Claims Are Being Denied

Here’s where organizations get surprised.

Claims can be denied when:

• MFA was declared but not enforced universally
• Backup architecture failed during attack
• Controls were overstated in the application
• Logging was inactive
• Incident response procedures were missing

Insurers increasingly validate whether declared controls were operational at the time of breach.

Accuracy matters.

Documentation matters.

Proof matters.

The Gap Between “Having IT” and “Meeting Insurance Standards”

Many Canadian mid-sized businesses have:

• A firewall
• Antivirus
• Backups
• An IT provider

But they lack:

• Centralized monitoring
• Formal documentation
• Policy enforcement tracking
• Restore testing documentation
• Executive reporting

That gap is where underwriting friction happens.

Many businesses have the right tools, but lack the documentation, enforcement tracking, and reporting insurers now expect.

Need Help Aligning IT with Insurance Compliance?

Request a Cyber Insurance Compliance Review

A Practical 7-Step Cyber Insurance Readiness Plan

If renewal is approaching, implement this immediately.

Step 1: Audit MFA Coverage

Confirm:

• MFA is enabled for all users
• Admin accounts use conditional access
• Legacy authentication is disabled

Step 2: Upgrade to Managed EDR

Ensure:

• Behavioral detection
• Active monitoring
• Isolation capability

Step 3: Review Backup Architecture

Verify:

• Immutable storage
• Encrypted offsite copies
• Quarterly restore tests
• Segregated credentials

Step 4: Centralize Logging

Confirm:

• Logs are retained
• Alerts are reviewed daily
• Privileged activity is monitored

Step 5: Formalize Incident Response

Include:

• Roles and responsibilities
• Escalation pathways
• Legal and insurance contacts
• Communication procedures

Step 6: Conduct Ongoing Security Training

Schedule:

• Quarterly refreshers
• Phishing simulations
• Policy acknowledgments

Step 7: Align Documentation With Your Insurance Application

Ensure:

• Application responses reflect operational reality
• Policies are documented
• Evidence is available if requested

The Financial Perspective

Detection and escalation costs account for a major portion of breach impact according to IBM’s 2023 report [1].

Longer detection times increase financial loss.

Security maturity influences:

• Premium pricing
• Deductibles
• Coverage limits
• Renewal approval

Cyber insurance is no longer a standalone policy.

It is now tied directly to your IT governance maturity.

The Strategic Opportunity

This shift is not purely restrictive.

It creates an opportunity.

Organizations that align with modern cyber insurance requirements in Canada gain:

• Stronger resilience
• Better detection capability
• Improved operational governance
• Lower long-term risk

After 25+ years supporting Canadian mid-sized businesses, we’ve seen the evolution firsthand.

Cyber insurance has become a forcing function for IT discipline.

The companies that treat it strategically gain stability.

The companies that treat it as paperwork experience friction.

Final Thoughts

Cyber insurance requirements in Canada have evolved significantly since 2021.

Insurers now expect:

• Enforced MFA
• Managed EDR
• Immutable backups
• Centralized monitoring
• Security awareness training
• Documented incident response plans

If you are unsure whether your current IT posture aligns with these expectations, now is the time to assess it.

Let’s ensure your organization meets modern cyber insurance requirements in Canada, before renewal forces the conversation.

Ready to Strengthen Your Cyber Insurance Position?

Cyber insurance requirements in Canada are not getting easier.

Let’s review your current controls, validate your coverage readiness, and ensure your IT posture aligns with modern underwriting expectations.

Schedule a consultation:

Book Your Cyber Insurance Readiness Consultation

References

[1] IBM Security, Cost of a Data Breach Report 2023
https://www.ibm.com/reports/data-breach

[2] Verizon, 2024 Data Breach Investigations Report (DBIR)
https://www.verizon.com/business/resources/reports/dbir/

[3] Canadian Centre for Cyber Security, National Cyber Threat Assessment 2023–2024
https://www.cyber.gc.ca/en/guidance/national-cyber-threat-assessment-2023-2024

[4] Gartner, Cyber Insurance Market Trends and Outlook 2023–2024
https://www.gartner.com/en/information-technology/insights/cybersecurity