A GlobalData survey has found that a cyber protection gap persists across UK SME segments, driven by rising threat exposure and the under-penetration of cyber insurance. As SMEs deepen their reliance on digital systems and cybercrime becomes more sophisticated, many firms remain uninsured or underinsured relative to their exposure.
GlobalData’s 2025 UK SME Insurance Survey found that cyber insurance penetration rises sharply in line with firm size: 13.1% of sole traders report holding cyber insurance, compared with 26.4% of micro firms, 40.1% of small firms, and 63% of medium-sized firms. This indicates that the smallest companies—which often have the weakest cyber controls and least capacity to absorb losses—remain the least protected. Persistent adoption barriers include perceived affordability issues, uncertainty about what cyber policies cover, and limited access to clear advice at the point of sale.
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Research from Grant Thornton reinforces the scale of non-coverage, finding that 35% of UK SMEs have no cyber insurance in place. Meanwhile, according to the UK Department for Science, Innovation and Technology, 42% of small businesses experienced a breach or attack in 2025, highlighting a widening mismatch between incident
frequency and protection. Experts argue that positioning cyber as a specialist add-on rather than standard commercial protection increases the likelihood of SMEs discovering coverage gaps only after an incident. For insurers, this under-penetration represents both a growth and retention opportunity. Closing the gap will require improving distribution effectiveness (including broker education and sales tools), reducing underwriting friction for smaller firms, and reframing cyber as a practical resilience product combining insurance with incident response and preventative services. Providers that make cyber cover easier to buy, easier to understand, and clearly relevant to SME operational continuity are best placed to increase attach rates and reduce persistent underinsurance.
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By GlobalData
