Employee accounts are increasingly targeted in cyber-attacks, with one in three incidents involving compromised credentials. To better assess cyber risk, insurers and regulators now focus on evaluating identity posture within organizations.
However, many organizations lack visibility into these assessments, which consider factors such as password hygiene, privileged access management, and multi-factor authentication (MFA) coverage. Understanding these identity-centric elements is crucial for organizations aiming to reduce risk exposure and secure favorable insurance terms.
Significance of Identity Posture in Underwriting
The global average cost of a data breach has risen to $4.4 million in 2025, prompting more organizations to turn to cyber insurance for financial protection. Although cyber insurance coverage has increased, insurers are tightening underwriting requirements due to a surge in claims.
Credential compromise remains a prevalent method for attackers to infiltrate systems, escalate privileges, and maintain persistence. Strong identity controls help mitigate the impact of compromised accounts, reducing the likelihood of widespread disruption or data loss and enabling more informed underwriting decisions.
Key Aspects Insurers Consider in Identity Security
Password Hygiene and Credential Exposure
Despite advancements in multi-factor authentication, passwords still play a crucial role in authentication. Organizations must address behaviors and issues that heighten the risk of credential theft and misuse, including:
- Reusing passwords across identities, especially for administrative or service accounts, increases the risk of broader access if one credential is compromised.
- Legacy authentication protocols like NTLM, despite being outdated, are often exploited to harvest credentials in networks.
- Dormant accounts with valid credentials serve as unmonitored entry points for attackers.
- Service accounts with perpetual passwords create prolonged, low-visibility attack vectors.
- Shared administrative credentials diminish accountability and magnify the impact of compromise.
Insurers prioritize organizations that actively manage password hygiene and credential exposure risks through regular audits, demonstrating a proactive approach to reducing identity-related threats.
Privileged Access Management
Effective privileged access management is critical for preventing and mitigating breaches. Insurers evaluate how organizations govern privileged accounts, as these accounts often have extensive access to sensitive systems and data.
Accounts like service accounts, cloud administrators, and delegated privileges outside centralized monitoring heighten risk, especially when lacking multi-factor authentication or detailed logging.
Overlapping administrative scopes and excessive membership in high-privilege roles indicate rapid and challenging privilege escalation, emphasizing the importance of well-governed privileged access.
Identifying and addressing stale, inactive, or over-privileged administrative accounts using tools like Specops Password Auditor helps organizations enhance security posture and mitigate credential-based risks.
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| Specops Password Auditor – Dashboard |
Insurers gauge the potential impact of a breach by assessing how quickly an attacker could escalate privileges after compromising a single account. Organizations with immediate or effortless privilege escalation paths face higher insurance premiums reflecting their heightened exposure.
Multi-Factor Authentication (MFA) Coverage
While many organizations claim to have deployed MFA, its effectiveness hinges on consistent enforcement across critical systems and accounts. In a notable case, the City of Hamilton was denied a substantial cyber insurance payout post-ransomware attack due to incomplete MFA implementation.
Although MFA is not foolproof, it adds a layer of security by requiring valid credentials and user approval for authentication requests. Insurers now mandate MFA for all privileged accounts, email, and remote access to mitigate risk. Organizations neglecting MFA enforcement may face increased insurance premiums.
Enhancing Identity Security for Improved Cyber Score
Organizations can bolster identity security by focusing on key areas that demonstrate progress to insurers:
- Strengthen Password Practices: Enforce robust password standards, eliminate password reuse, and prioritize strong password hygiene, especially for administrative and service accounts.
- Implement Comprehensive MFA: Enforce MFA across all critical access paths, including remote access, cloud applications, VPNs, and privileged accounts, to align with insurer expectations.
- Restrict Permanent Privileged Access: Minimize permanent administrative rights, adopt just-in-time access, and limit over-privileged accounts to reduce the impact of credential compromise.
- Regularly Audit Access: Conduct periodic reviews of user and privileged permissions to identify and address stale or unnecessary access, a common concern in insurance assessments.
Insurers expect organizations to not only have identity controls in place but also actively monitor and enhance them over time to reduce cyber risks. Tools like Specops Password Auditor offer visibility into password exposure and help enforce controls to mitigate credential risks.
For guidance on implementing these controls and aligning them with insurer requirements, consult a Specops expert or request a live demo for tailored solutions.
