Identity Cyber Scores: The New Metric Shaping Cyber Insurance in 2026
In the evolving landscape of cybersecurity, the focus has increasingly shifted towards the integrity of organizational identities. As of 2026, a significant proportion of cyber-attacks—approximately one in three—are linked to compromised employee accounts. This alarming trend has prompted insurers and regulatory bodies to place a heightened emphasis on an organization’s identity posture when evaluating cyber risk.
For many enterprises, the criteria used in these assessments remain somewhat opaque. Key factors such as password hygiene, management of privileged access, and the extent of multi-factor authentication (MFA) implementation are now pivotal in determining cyber risk and, consequently, insurance premiums. A thorough understanding of these identity-centric elements is essential for organizations aiming to demonstrate reduced risk exposure and to negotiate more favorable insurance terms.
The Rising Importance of Identity Posture in Underwriting
The financial repercussions of data breaches have been escalating, with the global average cost reaching $4.4 million in 2025. This surge has led more organizations to seek cyber insurance as a means to mitigate financial risks. In the United Kingdom, for instance, cyber insurance coverage expanded from 37% in 2023 to 45% in 2025. However, the increasing volume of claims has compelled insurers to tighten their underwriting standards.
Credential compromise remains a favored tactic among cyber adversaries to gain unauthorized access, escalate privileges, and maintain persistence within target environments. From an insurer’s perspective, robust identity controls are instrumental in reducing the probability that a single compromised account could lead to extensive disruption or data loss. Such controls support more sustainable underwriting decisions by mitigating potential risks.
Key Identity Security Factors Valued by Insurers
1. Password Hygiene and Credential Exposure
Despite advancements in authentication methods, including the adoption of MFA and passwordless technologies, passwords continue to play a central role in security frameworks. Organizations must be vigilant about practices that heighten the risk of credential theft and misuse, such as:
– Password Reuse: Utilizing the same passwords across multiple accounts, especially for administrative or service accounts, increases the risk that a single compromised credential could grant broader access.
– Legacy Authentication Protocols: Outdated protocols like NTLM, which persist in many networks despite being superseded by more secure alternatives like Kerberos, are frequently exploited to harvest credentials.
– Dormant Accounts: Inactive accounts with valid credentials serve as unmonitored entry points and often retain unnecessary access privileges.
– Service Accounts with Non-Expiring Passwords: These accounts create long-standing, low-visibility attack vectors due to their perpetual validity.
– Shared Administrative Credentials: The practice of sharing administrative credentials diminishes accountability and amplifies the potential impact of a security breach.
From an underwriting standpoint, demonstrating an organization’s awareness and proactive management of these risks is often more critical than the mere presence of specific technical controls. Regular audits focusing on password hygiene and credential exposure are indicative of a mature approach to mitigating identity-driven risks.
2. Privileged Access Management
Effective management of privileged access is a cornerstone of an organization’s capability to prevent and mitigate security breaches. Privileged accounts, due to their elevated access to systems and data, are often over-permissioned, making them attractive targets for attackers. Insurers, therefore, scrutinize how these accounts are governed.
Factors that elevate risk include:
– Unmonitored Service Accounts and Cloud Administrators: These accounts, especially when operating without MFA or proper logging, significantly increase vulnerability.
– Excessive Membership in High-Level Roles: Overpopulated Domain Admin or Global Administrator roles, along with overlapping administrative scopes, suggest that privilege escalation could occur rapidly and be challenging to contain.
Poorly managed or unidentified privileged access is typically viewed as a higher risk compared to a limited number of well-controlled administrators. Security teams can utilize tools like Specops Password Auditor to identify and remediate stale, inactive, or over-privileged administrative accounts before they are exploited.
When assessing the potential for a damaging breach, insurers consider how swiftly an attacker could escalate privileges upon compromising a single account. If the answer is immediately or with minimal effort, insurance premiums are likely to reflect that heightened exposure.
3. Multi-Factor Authentication (MFA) Coverage
While many organizations claim to have deployed MFA, its effectiveness in reducing risk is contingent upon consistent enforcement across all critical systems and accounts. There have been instances where organizations were denied substantial cyber insurance payouts following ransomware attacks due to incomplete MFA implementation across affected systems.
Although MFA is not infallible, attacks that exploit MFA fatigue first require valid account credentials and then depend on a user approving an unfamiliar authentication request—an outcome that is not guaranteed.
Accounts that authenticate via older protocols, non-interactive service accounts, or privileged roles exempted for convenience present viable bypass routes once initial access is achieved.
Consequently, insurers increasingly mandate MFA for all privileged accounts, as well as for email and remote access. Organizations neglecting comprehensive MFA implementation may face higher insurance premiums.
Four Steps to Enhance Your Identity Cyber Score
Organizations can take several measures to improve their identity security posture, thereby positively influencing their cyber insurance evaluations:
1. Eliminate Weak and Shared Passwords: Enforce stringent password standards and minimize password reuse, particularly for administrative and service accounts. Robust password hygiene limits the impact of credential theft and reduces the risk of lateral movement following initial access.
2. Implement Comprehensive MFA: Ensure that MFA is enforced across all critical access points, including remote access, cloud applications, VPNs, and all privileged accounts. Insurers increasingly expect MFA coverage to be comprehensive rather than selectively applied.
3. Reduce Permanent Privileged Access: Limit permanent administrative rights wherever feasible and adopt just-in-time or time-bound access for elevated tasks. Fewer always-on privileged accounts directly reduce the impact of credential compromise.
4. Conduct Regular Access Reviews: Perform routine evaluations of user and privileged permissions to ensure they align with current roles. Stale access and orphaned accounts are common red flags in insurance assessments.
Insurers are progressively expecting organizations to demonstrate not only the existence of identity controls but also their active monitoring and continuous improvement over time.
