As cyberattacks become more frequent and more expensive, insurance carriers have tightened their underwriting requirements. Today, qualifying for cyber insurance isn’t just a matter of filling out an application—organizations must demonstrate mature cybersecurity controls aligned with frameworks such as the NAIC Insurance Data Security Model Law (#668). Many insurers now treat NAIC‑aligned controls as the baseline for approving coverage or preventing exclusions in the event of a claim.
In this guide, we’ll break down what NAIC cybersecurity controls require, why insurers rely on them, and how your organization can meet these expectations to secure coverage and reduce premium volatility.
1. Understanding the NAIC Cybersecurity Framework
The National Association of Insurance Commissioners (NAIC) developed the Insurance Data Security Model Law (#668) to standardize cybersecurity requirements for insurers and their service providers across the U.S.
Core elements of the Model Law require organizations to:
- Conduct annual risk assessments to identify threats to information systems.
- Maintain a formal information security program tailored to those risks.
- Implement board oversight for cybersecurity programs.
- Enforce security controls such as access management, encryption, MFA, and secure data disposal.
- Oversee third‑party service providers and ensure they follow strong security practices.
- Maintain and periodically test a written incident response plan.
Many insurers rely on this Model Law because it represents a realistic, enforceable baseline for preventing major cyber claims.
2. Why Insurers Use NAIC Controls in Underwriting
Cyber insurance underwriting has changed significantly. Rising breach costs, ransomware claims, and market volatility mean insurers now validate cybersecurity controls with far more rigor than before.
According to industry analyses, cyber insurance requirements in 2026 focus heavily on controls like MFA, endpoint detection and response, encrypted backups, IAM, and incident response plans.
Similarly, reports show that insurers increasingly depend on identity‑centric, defensible security measures—especially those aligned with frameworks such as NAIC’s Model Law—to determine eligibility and pricing.
In other words: NAIC controls are what insurers trust to reduce real‑world cyber risk.
3. The Essential NAIC‑Aligned Controls Insurers Expect
Below are the most critical control categories insurers look for when referencing NAIC cybersecurity expectations.
A. Risk Assessment & Governance
Insurers expect to see a documented, annual risk assessment that identifies threats, evaluates likelihood and impact, and drives the security program.
NAIC requires this as a foundational control.
Key elements insurers look for:
- Formal risk register
- Executive or board oversight
- Policies updated annually
- Evidence that risk findings lead to remediation activities
Strong governance shows that cybersecurity isn’t just a checklist—it’s part of your operational leadership.
B. Access Controls & Identity Management
Identity security is the #1 underwriting priority in 2026.
Organizations must implement:
- Multi‑Factor Authentication (MFA) for remote access and sensitive systems
- Least privilege access
- Role‑based access control (RBAC)
- Automated or policy‑driven deprovisioning
- Audit trails of access reviews
These controls directly reduce ransomware, data exposure, and business email compromise—top causes of cyber claims.
C. Encryption & Data Protection
The Model Law requires encryption of non‑public information both in transit and at rest.
Insurers will look for:
- TLS 1.2+ for network encryption
- Encryption on laptops, servers, cloud storage
- Encrypted backups stored offline or in immutable storage
- Clear policies for data retention and disposal
Encryption is often a pass/fail control for underwriting.
D. Security Monitoring & Incident Response
The NAIC requires organizations to monitor systems regularly for security events and maintain a written incident response plan, which must be tested periodically.
Insurers expect:
- Centralized logging or SIEM
- Alerts for unusual access or privilege escalation
- Documented IR plan
- Evidence of IR tabletop tests
- Ransomware‑specific procedures
Strong detection and response capabilities drastically reduce claim severity.
E. Third‑Party and Vendor Risk Management
Insurers and NAIC both require organizations to evaluate and ensure that third‑party service providers follow appropriate security practices.
Underwriters expect:
- Vendor inventory and risk classification
- Annual assessments for critical vendors
- Contractual security requirements
- Documentation proving oversight
Since many breaches originate through vendors, this category is increasingly important for insurers.
4. What Evidence Insurers Expect in a Cyber Insurance Application
To qualify for coverage, insurers may request evidence such as:
- Results of your annual risk assessment
- Copies of your incident response plan
- MFA and SSO configuration screenshots
- Endpoint protection and EDR deployment reports
- Encryption configuration documentation
- Penetration test reports
- Results of annual security awareness training
- Vendor questionnaires or SOC reports
Think of these as proving that your NAIC‑aligned controls are real, not theoretical.
5. Common Reasons Organizations Fail to Qualify for Coverage
Insurers may deny, restrict, or surcharge policies when organizations lack:
- MFA on email, VPN, and admin accounts (most common denial reason)
- Documented incident response plan
- Regular penetration testing
- Centralized logging or monitoring
- Encrypted backups or immutable backups
- Formal vendor management processes
These gaps conflict directly with NAIC requirements and represent high claim risk.
Final Thoughts
Cyber insurance is no longer guaranteed. Insurers want evidence that organizations follow strong cybersecurity practices—and NAIC cybersecurity controls offer the blueprint most underwriters trust.
By aligning your program with NAIC Model Law requirements—risk assessments, governance, access controls, encryption, monitoring, IR planning, and vendor oversight—you demonstrate that your organization takes cyber risk seriously and is prepared to prevent, detect, and respond to attacks.
For companies seeking coverage, renewal stability, or better terms, meeting NAIC cybersecurity controls is now essential—not optional.
