Cyber Insurance for the Manufacturing Industry

Cyber insurance for industrial companies covers financial losses resulting from cyberattacks, data breaches, and IT failures—including the specific risks arising from networked production environments and Operational Technology (OT). For manufacturing firms, this is a fundamentally different product than for pure IT service providers: production downtime, machine manipulation, and the sabotage of control systems are risks that traditional "office" cyber policies often fail to cover.

In the manufacturing sector, cyber insurance is no longer a niche topic. Ransomware attacks on production sites have increased drastically, with average downtimes lasting several weeks and total damages quickly reaching seven-figure sums. Consequently, insurers are setting strict technical minimum requirements, often rejecting companies without sufficient security measures or charging prohibitive premiums.

What Industrial Cyber Insurance Covers

A market-standard policy for manufacturing typically includes:

• First-Party Losses: Costs for IT forensics, incident response, and data recovery.
• Business Interruption (BI): This is the most critical component. If ransomware halts production for two weeks, the loss of contribution margin can be devastating. Note: Ensure your policy explicitly covers OT-related outages.
• Liability: Coverage for third-party claims (e.g., customers affected by your downtime), GDPR fines, and data breaches involving partner data.
• Extortion & Cyber Crime: Coverage for crisis negotiation in ransomware cases and protection against Social Engineering or CEO Fraud.

OT Security: Why Production is a Special Case

Traditional IT security (firewalls, antivirus, frequent updates) cannot always be directly applied to OT. Production plants often have lifecycles of 20–30 years, running on legacy operating systems that no longer receive patches.

However, modern OT is increasingly networked for ERP integration and remote maintenance. This connectivity is the primary attack vector: criminals enter via the IT network and move laterally into the OT environment to encrypt control systems. Insurers now evaluate OT security as a standalone risk factor.

Minimum Technical Requirements for Insurability

To obtain a policy today, companies must typically demonstrate:

1. Network Segmentation: A clear separation between the office network (IT) and production network (OT), ideally via a DMZ.
2. Multi-Factor Authentication (MFA): Mandatory for all remote access and privileged accounts.
3. 3-2-1 Backup Strategy: Three copies of data, on two different media, with one copy being offline or air-gapped.
4. Patch Management: Regular updates for IT. For unpatchable OT, compensatory measures (e.g., application whitelisting) are required.
5. Incident Response Plan: A documented, tested manual on how to react during an attack.
6. Security Awareness Training: Proven employee training to prevent phishing and social engineering.

NIS2 and Cyber Insurance

The NIS2 Directive mandates strict cybersecurity measures for many manufacturing companies (50+ employees or €10M+ turnover). Since NIS2 requirements align closely with insurance standards (ISO 27001, NIST), achieving NIS2 compliance provides a dual return: legal fulfillment and significantly better insurance terms.

How Production Systems Affect Premiums

Insurers favor modern infrastructures. A Cloud-native MES with documented security—role-based access, full audit trails, and ISO 27001 hosting—is considered much lower risk than a fragmented on-premise solution with outdated servers and manual update processes.

FAQ

At what company size does cyber insurance make sense? As soon as a production standstill becomes an existential threat. For most mid-sized manufacturers (SMEs), this is typically reached at a turnover of €10M–€15M.

What does it cost? For a company with €30M–€100M in turnover and solid security, annual premiums generally range between €15,000 and €80,000 for a coverage limit of €5M–€10M.

Does it cover human error? Yes. Accidental errors, such as an employee clicking a phishing link, are typically covered. Intentional malicious acts by employees may require specific "insider threat" clauses.

Cyber vs. General Business Interruption Insurance? Standard BI insurance covers physical events (fire, flood). Cyber-related outages are usually excluded there. Cyber insurance specifically closes this digital gap.