How Cybersecurity Companies Can Offer Insurance Without Becoming Insurers
- Steven Barge-Siever, Esq.
- 4 hours ago
- 2 min read
By Steven Barge-Siever, Esq
The Misconception
When cybersecurity firms first consider offering insurance alongside their product, the immediate assumption is that they would need to become an insurance company.
That’s not how these structures work.
Cybersecurity firms are not becoming insurers. They are structuring insurance around their product in a way that allows them to participate in the outcome - without taking on the full regulatory burden of an insurance carrier.
Why This Matters
Today, most cybersecurity firms are excluded from the insurance layer entirely.
Insurers:
control breach response
select vendors
manage the financial outcome
Cybersecurity firms:
prevent the risk
detect threats
reduce severity
But they are not part of what happens after a breach. Our model changes that.
The Core Idea
Instead of relying on a third-party insurer to control the entire process, cybersecurity firms can structure insurance alongside their own offering.
From the client’s perspective, this looks like:
Security provided by the cybersecurity firm
Coverage included as part of the solution
A single provider responsible for both prevention and response
Behind the scenes, the structure is more nuanced.
How the Structure Works
These programs are typically built using three components:
1. A Licensed Insurance Carrier
A licensed carrier issues the policy - This is what makes the coverage:
compliant
recognizable as real insurance
acceptable to enterprise buyers
The cybersecurity firm does not replace the carrier - it works alongside it.
2. A Captive Structure
A captive insurance company is created to support the program.
This allows the cybersecurity firm to:
fund a portion of the risk
stand behind its product financially
align insurance with actual performance
This is where ownership comes from.
3. Program Design Around the Product
The coverage is structured to reflect what the cybersecurity firm actually controls.
Typically, that means focusing on:
incident response
remediation costs
breach-related expenses
Not every possible cyber exposure - This alignment is critical.
What This Allows
When structured correctly, this model allows cybersecurity firms to:
remain involved after a breach
control how response is handled
avoid being excluded by insurer panels
stand behind their product in a tangible way
It changes the role of the cybersecurity firm from vendor to participant.
What This Is Not
This is not:
becoming a traditional insurance carrier
taking on unlimited insurance risk
replacing the entire cyber insurance market
It is a targeted structure designed around the portion of risk the firm actually influences.
Who This Works For
This approach is most effective for cybersecurity companies that:
operate at scale (not for start ups)
have or want to win enterprise clients
offer continuous monitoring or detection
have a product that demonstrably reduces loss
It is not designed for early-stage firms or purely advisory models.
The Strategic Shift
The traditional model separates:
prevention (cybersecurity firm)
response (insurer + panel)
This structure connects them.
The same company that works to prevent the risk is now involved in the outcome.
Learn More
If you want to understand how this is structured in more detail:
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Steven Barge-Siever, Esq.
