Why AI Governance Is Becoming Cyber Insuranceโs Next MFA
By Kareena Bavisi, Chief of Staff to CEO at EC-Council
I set out to understand why companies still donโt think theyโre adequately covered. What I found looks like a pattern the insurance industry has lived through once already: multi-factor authentication went from a nice-to-have to a near-universal underwriting expectation in a matter of years, and insurers that got burned by its absence started pricing around it, denying claims over it, walking away from risks that didnโt have it. AI governance is tracing the same path, earlier, but faster. It isnโt a formal requirement anywhere in the cyber insurance market yet. But the data in this piece says itโs headed there, and the companies that treat it as optional for too long are going to find that out the same way the MFA holdouts did.
Hereโs a number that should worry any CISO building an AI governance program right now: 74% of professionals who evaluate, deploy, secure, or govern AI at their organizations believe they could pass an AI compliance audit today. Only 27% describe their governance program as fully mature. Thatโs according to Schellmanโs State of AI Governance Report 2026, a survey of 525 U.S.-based practitioners, and itโs close to an exact echo of a number Iโd already been sitting with: in Munich Reโs 2026 Global Cyber Risk and Insurance Survey, 89% of C-level respondents say they donโt consider their company adequately protected against cyberattacks, up from 81% in 2021, 83% in 2022, and 87% in 2024. Two different surveys, two different questions, the same shape: confidence and reality keep drifting apart, and whateverโs being done about it isnโt closing the gap.
Bob Parisi, Head of Cyber Solutions for North America at Munich Re, has spent nearly three decades underwriting cyber risk. I asked him why. His answer wasnโt about a missing product. It was about two groups of people who donโt speak the same language.
A literacy problem, not a product problem
โDealing with financial risk transfer is not something a CISO deals with every day,โ he told me. The reverse is just as true: underwriters are pricing a technical risk they donโt observe directly, working from what a company represents about itself once a year, usually through a broker-scheduled call. โ We typically engage with them once a year when they fill out the application,โ he said. Where that changes, he told me, is in companies where the CISO, CFO, and chief privacy officer are already talking to each other internally, those are the ones that end up buying coverage closer to their real exposure.
His own companyโs data backs that up. Asked whatโs holding back better cyber defense, Munich Reโs survey found the top two answers were both about people, not tools: โlow security awareness among employeesโ (40%) and a lack of skilled personnel (31%), both ahead of budget. The disconnect Parisi described anecdotally is the top-ranked problem in his own companyโs data.
That disconnect is what got me thinking about how to close it, and itโs why companies like the Cyber Insurance Academy exist. The talent gap behind it is well documented: insurers report more than 400,000 open positions across lines of coverage, cyber underwriting pay runs well above a typical brokerโs, and the shortage persists anyway, because, as Gallagherโs Joey Sylvester has put it, โthere are a very limited number of individuals specializing in this class of businessโ who can keep up with both the insurance market and the cybersecurity industry at once. Thatโs the same disconnect Munich Reโs own survey flagged as the top two defense challenges: low security awareness and a shortage of skilled people, not budget. Closing it takes skilled people whoโve actually sat through the training, courses like the CCIS, built to give security and insurance professionals enough of each otherโs language that the once-a-year application conversation reflects real exposure, instead of two sides talking past each other.
What MFA can tell us about where AI governance is headed
This is where I think the Schellman number matters more than it looks on its own. AI governance right now sits roughly where multi-factor authentication sat two or three years ago, something insurers were starting to care about, but not yet something theyโd decline a policy over. Thatโs changed fast. Brokers who place cyber coverage say MFA has gone from a minor underwriting factor to close to a hard requirement in the span of about two years. Insurers that once quoted risks without MFA, sometimes with a small premium loading, have largely stopped offering that option. Integrityโs Colin Fox says only a handful of insurers will still write a policy without it, describing it as โquite a rarity these daysโ in comments to Insurance Business UK.
AI, in Parisiโs words, is โfirst and foremostโ in what Munich Re is watching right now. โIt takes up a lot of the oxygen in the room in any discussion around cyber risk,โ he told me. Thatโs not a formal policy change, but pricing is where MFAโs history is instructive. The pattern with MFA wasnโt that insurers added a new exclusion, it was that a control quietly moved from a nice-to-have to a baseline expectation, and companies that couldnโt demonstrate it found their options narrowing. Endpoint detection and response looks to be following the same track; brokers describe it as already close to mandatory for companies seeking higher coverage limits.
AI governance looks like itโs on the same curve, just earlier. 71% of C-level respondents in Munich Reโs survey now call AI significantly relevant to their business, up from 62% two years ago, overtaking cloud computing as the most-flagged technology. Thatโs the kind of inflection point MFA passed through before it hardened into a requirement.
What underwriters are actually scoring
No single AI tool moves the needle on its own. Deploying a specific product doesnโt earn a company a flat discount on premium. What underwriters are actually pricing, Parisi explained, is maturity, whether a company can show itโs using AI deliberately rather than just enthusiastically, and he pointed to three signals in particular.
- Overexuberance. A security team that has rushed to deploy AI everywhere without building the process to manage it first.
- Denial. A company that insists it isnโt using AI at all. Parisiโs read is that itโs there whether leadership acknowledges it or not.
- Disciplined adoption. A company that treats AI as genuinely new, testing it deliberately and rolling it into production only once itโs confident the rollout strengthens the organization rather than exposing it.
โKnowledge is power,โ he told me. โAnything that helps a company better understand its risk, and articulate how itโs managing and mitigating that risk, will be viewed very positively by our underwriters.โ That kind of structured, documented governance work, something a company can actually point to, is exactly what reads as a green flag to him. AI governance, in particular, is shaping up as its own discipline, distinct from general security literacy, and the organizations building that competency deliberately, rather than picking it up as they go, are the ones standing out.
That same logic, structured proof of risk maturity that underwriters can actually price, is my own case for why EC-Councilโs CRAGE certification and its underlying Adopt, Defend and Govern (ADG) framework exist. ADG, developed with input from 23 advisory members across the industry, and CRAGE under it train practitioners to produce exactly the kind of documented risk articulation that reads as a green flag to an underwriter, translating AI governance maturity into terms a cyber insurer can price.
Schellmanโs own numbers back this up from a different angle: companies with mature AI governance programs have AI agents running in production at more than three times the rate of companies with developing programs, 78% versus 22%. The gap isnโt just about compliance paperwork. Mature governance correlates with companies that are actually further along in deploying the technology with confidence.
The bottom line
Parisiโs advice from the underwriting side was simple: stop treating the insurer conversation as a compliance form, and start treating it like a board conversation. โThink of the cyber insurers as if you were talking to your board of directors, because thatโs really the perspective weโre looking at this from,โ he told me. โWe donโt want to know which edition of the software youโre using. We want to know you have the right processes and protocols for making sure that software is updated and deployed, and an understanding of what the potential financial loss is if it goes wrong.โ
Put the two patterns side by side, and AI governance is not going to stay optional. MFA went from a footnote to a wall in about two years once insurers decided it was a real predictor of loss, and the Schellman numbers suggest the market is already sorting companies into those who can prove maturity and those who canโt. The 89% of executives who donโt feel protected today have a narrowing window to close that gap before it closes on them, and closing it looks a lot like what this piece has been circling the whole way through: literacy on one side of the table, documented maturity on the other.
Kareena Bavisi, Chief of Staff | EC-Council
Kareena Bavisi is a contributor to CISO MAG covering cybersecurity and AI, writing on how emerging technology is reshaping risk, governance, and the way enterprises defend themselves. Her work draws on conversations with security leaders, insurers, and technologists across the industry to surface the trends shaping the field. She is also Chief of Staff to the CEO and Founder at EC-Council, a global leader in cybersecurity certification and education.
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