The demand for cyber insurance has never been higher. As businesses grow increasingly digital and interdependent, they face a broader spectrum of threats—many of which originate from outside their own network. While internal breaches used to dominate headlines, recent data reveals a growing shift: third-party risk is now a top driver of cyber insurance claims.
A single vulnerability in a vendor or service provider can trigger a cascade of damage across hundreds of companies. Insurers are taking note, and the consequences for policyholders are real; rising premiums, stricter terms, and growing pressure to prove strong third-party risk management practices.
Recent industry reports confirm this trend. According to cyber insurer Resilience, more than 60% of claims in 2023 were tied to third-party incidents. As attack surfaces expand beyond organizational borders, managing vendor risk is no longer optional—it’s essential for maintaining both operational continuity and insurability.
What Is Cyber Insurance and Why Businesses Need It
Cyber insurance is a specialized form of coverage designed to help organizations recover from cyberattacks, data breaches, and other digital threats. As cybercrime evolves in scale and sophistication, businesses—large and small—are turning to these policies for financial and operational protection.
Typical cyber insurance coverage includes:
- Incident response costs (e.g. forensics, legal, PR)
- Notification and credit monitoring for affected individuals
- Business interruption losses
- Ransomware payments
- Third-party liability claims
What makes cyber insurance essential today is that even organizations with strong internal controls can still be compromised, especially via vendors, partners, and service providers. This external risk, often harder to detect and control, is what’s now reshaping the insurance landscape.
Surge in Claims: The Emerging Role of Third-Party Breaches
In recent years, third-party breaches have overtaken many traditional internal threats as a primary driver of cyber insurance claims.
Key Statistics:
- According to data from Resilience, as reported by Risk & Insurance, third-party risks, including ransomware and vendor outages, accounted for 31% of all cyber insurance claims in 2024, a substantial increase from previous years. Remarkably, 2024 marked the first time third-party incidents resulted in incurred losses, comprising 23% of such claims, compared to 0% in 2023.
- According to Resilience’s Midyear 2023 Claims Report, third-party vendor incidents have become the leading point of failure in cybersecurity, accounting for 28.9% of the company’s clients’ all-time claims.
- Between 2021 and 2023, supply chain cyberattacks surged by 431%, and projections suggest this figure will continue to rise sharply through 2025. — Cowbell Cyber, as reported by Insurance Business America
- According to NetDiligence’s 2024 industry data, the average cyber insurance claim across organizations of all sizes was $812,000, encompassing both first-party and third-party costs.
Why the surge? The average enterprise uses over 1,000 vendors—many of which have privileged access to data or systems. When even one of those vendors is compromised, the ripple effect is immediate, far-reaching, and costly.
Cyber insurers are now responding by tightening underwriting requirements and scrutinizing third-party risk postures like never before.
The Insurance Industry’s Response
Increased Underwriting Scrutiny
As third-party breaches drive a growing share of cyber insurance claims, insurers are tightening their underwriting processes. What used to be a general questionnaire about cybersecurity posture has evolved into deep due diligence, especially regarding vendor relationships.
Insurers now routinely request:
- Third-party risk assessments and vendor inventories
- Proof of ongoing monitoring of supply chain partners
- Risk scoring data
- Documentation of vendor contracts, including incident notification clauses
Organizations that can’t demonstrate visibility and control over their third-party ecosystem may face delays in policy issuance, exclusions for certain risks, or outright denial of coverage.
Higher Premiums and Stricter Terms
The financial reality of frequent third-party-related claims is forcing insurers to raise premiums and introduce stricter coverage terms. Businesses with limited vendor oversight are being viewed as higher-risk policyholders.
Key Trends in Cyber Insurance Pricing:
| Factor | Impact on Premiums |
| No vendor risk management | ↑ 15–25% increase |
| High vendor count (>1,000) | ↑ 10–20% increase |
| Past third-party breach claim | ↑ 30–50% renewal hike |
| Continuous monitoring in place | ↓ 10–15% discount potential |
Coverage limits are also being restructured. Some insurers are now segregating third-party incidents under sub-limits or requiring higher retentions for supply chain-related claims.
As a result, proactive third-party risk management isn’t just good security—it’s good insurance economics. Businesses that can prove strong controls are more likely to secure affordable and comprehensive cyber insurance.
Managing Third-Party Risk to Reduce Cyber Insurance Claims
Proactive Third-Party Risk Management Strategies
Reducing exposure to third-party risk requires more than annual vendor questionnaires. Organizations need to adopt ongoing, proactive measures to identify, assess, and monitor their vendor ecosystem in real time.
Here are key strategies that help reduce the likelihood and severity of third-party-related claims:
- Comprehensive vendor inventories: Maintain an up-to-date list of all third parties, including those with indirect access.
- Tiered risk classification: Prioritize vendors based on their risk score, factoring in threat intelligence, security posture, and exposure
- Contractual security obligations: Ensure all vendors are bound by SLAs that include breach notification, security controls, and right-to-audit clauses.
- Third-party risk assessments: Perform detailed evaluations of vendors’ cybersecurity maturity, ideally before onboarding and regularly thereafter.
- Incident response playbooks: Include third-party scenarios in your incident response plan to streamline recovery.
By addressing third-party risk with structure and consistency, organizations can show insurers they are serious about minimizing claims, which in turn helps them negotiate better policy terms.
How Sling Helps Reduce Third-Party Risk Exposure
Sling is built to help organizations take control of their third-party ecosystem and reduce the likelihood of cyber incidents before they become cyber insurance claims. Through automation, threat intelligence, and intuitive workflows, Sling delivers continuous visibility into vendor risk posture.
Key capabilities include:
- Centralized vendor dashboard: Track all third parties, their risk scores, and exposure in one place.
- Automated onboarding and assessments: Streamline vendor intake with built-in questionnaires, scoring, and approval flows.
- Darknet monitoring: Get alerted when a third party appears in breach chatter or is linked to leaked credentials or exploit kits.
- Tiering and prioritization: Automatically classify vendors by impact level, helping security teams focus on the most critical relationships.
With Sling, you don’t just react to third-party incidents, you anticipate and prevent them.
Real Benefits for Reducing Claims
By using Sling, organizations create a defensible security posture that insurers recognize. This leads to:
- Lower premiums: By demonstrating proactive controls, businesses can reduce their risk profile and insurance costs.
- Better coverage terms: Insurers are more likely to offer comprehensive coverage without restrictive exclusions.
- Faster policy approval: Clear evidence of third-party oversight simplifies the underwriting process.
- Reduced claim frequency and severity: With real-time alerts and continuous monitoring, many risks can be addressed before escalation.
In a time when third-party risk is dominating cyber claims, platforms like Sling give security and risk teams the tools to protect both operations and insurability.
Looking Ahead: The Future of Cyber Insurance and Third-Party Risk
Evolving Underwriting Standards
As cyber threats continue to evolve, especially those tied to third parties, insurance underwriting will become more data-driven and dynamic. Traditional static assessments are being replaced by continuous risk evaluation, with underwriters increasingly relying on:
- Security ratings from third-party risk platforms
- Real-time threat intelligence feeds
- Evidence of continuous monitoring and vendor oversight
- Breach history across vendor ecosystems
Insurers will favor businesses that treat cyber risk as a living process, not a once-a-year checkbox exercise. Going forward, underwriting decisions will depend on how well organizations manage third-party exposure over time, not just at the point of renewal.
There’s no question that third-party risk is now one of the leading causes of cyber insurance claims. As organizations increasingly depend on external vendors, cloud services, and digital partners, their risk exposure naturally extends beyond their internal controls.
Insurers are paying close attention. Premiums are rising, underwriting is more rigorous, and policy terms are becoming more restrictive, especially for organizations that can’t demonstrate strong oversight of their vendor ecosystem.The good news is that this risk is manageable. With solutions like Sling, companies can gain full visibility into their third-party relationships, automate risk assessments, monitor for real-time threats, and take action before issues escalate. This proactive approach not only strengthens your security posture, it can also reduce insurance costs and improve access to coverage.