Why South African Cyber-Insurance Claims Are Being Denied in 2025

South African businesses are increasingly at risk of cyber-insurance claim denials or partial rejections due to gaps between declared security measures and actual implementation. This trend reflects a broader global shift where insurers rigorously scrutinize cybersecurity maturity during forensic investigations following incidents.

According to the Sophos Cyber Insurance and Cyber Defences 2024 report — based on a global survey of 5,000 IT and cybersecurity leaders — 47% of organizations with cyber insurance experienced at least partial claim denials. Recovery costs from cyberattacks often exceed policy limits, with only 1% of claimants receiving full coverage for remediation expenses.

In South Africa, escalating ransomware threats amplify these challenges. The Sophos State of Ransomware in South Africa Report 2025 reveals the median ransom demand surged dramatically from US$165,000 (approximately R2.9 million) in 2024 to R17 million in 2025, highlighting the financial pressure driving both attacks and insurance scrutiny.

Muhammad Ali, Managing Director of World Wide Industrial & Engineering Systems (WWISE) — a leading South African ISO 27001 specialist — emphasizes that insurers now adopt a tailored, risk-based approach rather than blanket requirements.

Over the past three to five years, the cyber-insurance landscape has transformed due to massive ransomware losses,

Ali explains.

Insurers have moved away from one-size-fits-all minimums toward requirements customized by business size, industry, endpoint count, and system criticality.

Key Reasons Cyber-Insurance Claims Fail in South Africa

Insurers conduct detailed post-incident reviews, often uncovering discrepancies that lead to denials. Common issues include:

• Misrepresentation or non-disclosure of security controls at policy inception — the leading cause of refusals. Forensic analysis frequently reveals absent logging, monitoring, or evidence tracing attacks, leading insurers to argue negligence (especially in ransomware scenarios).
• Outdated or ineffective tools, such as free/expired/misconfigured antivirus solutions.
• Limited “firewall compliance” focused only on basic Wi-Fi rather than comprehensive network-level protections.
• Proposal forms completed without sufficient technical expertise or input.
• Failure to fully understand or adhere to policy wording, minimum-requirement schedules, and obligations (e.g., using own investigators instead of the insurer’s incident-response team, which can complicate or invalidate claims).

Many organizations mistakenly assume purchasing cyber insurance guarantees a payout. In reality, insurers verify everything during investigations, and gaps in actual implementation result in disputes.

Shift to Continuous Assurance and Proactive Controls

Insurers no longer accept traditional annual security audits as sufficient proof of resilience. The focus has shifted to continuous visibility and proactive measures, including:

• Timely patching and vulnerability management.
• Real-time monitoring and logging.
• Effective incident response and recovery capabilities.

This evolution demands ongoing evidence of controls rather than point-in-time compliance.

The Role of ISO 27001 in Securing Better Coverage and Lower Premiums

Alignment with international standards like ISO/IEC 27001 is gaining prominence. Insurers often model proposal forms on ISO frameworks, viewing certification as strong evidence of properly implemented and monitored controls.

Demonstrating genuine ISO 27001 compliance can reduce premiums by up to 50%,

notes Ali.

It provides insurers with assurance that your organization maintains robust, auditable information security practices.

WWISE supports businesses through ISO 27001-aligned risk assessments, policies, procedures, and comprehensive evidence packs to bridge gaps between declared and actual security postures.

Looking Ahead: Intensifying Threats and Stricter Requirements

As AI-driven threats grow more sophisticated, insurers are expected to tighten standards further. Ali predicts increasing reliance on ISO 27001:2022 as the benchmark for robust information security.

Organizations must move beyond box-ticking to genuine alignment to remain insurable,

he warns.

Proactive, continuous cybersecurity maturity — not just insurance — is essential for resilience in South Africa’s escalating threat landscape.

South African businesses can no longer treat cyber insurance as a standalone safety net. By addressing common pitfalls, investing in verifiable controls, and pursuing standards-based maturity, organizations can improve claim success rates, reduce premiums, and build stronger defenses against the rising tide of cyber risks in 2025 and beyond.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.