Cyber insurance premiums have soared in 2022. This trend is making the cover unaffordable for businesses, with many SMEs already not taking out cover due to the cost according to GlobalData findings.
GlobalData’s 2021 UK SME Insurance Survey found that 88.8% of all UK SMEs did not have cyber insurance in place. The survey found that smaller businesses are more exposed, as only 6.6% of sole traders and 21.0% of micro businesses (one to nine employees) had cyber insurance, compared to 40.1% of small enterprises (10–49 employees) and 54.3% of medium enterprises (50–249 employees). A study by Aon found that average cyber premiums rose by more than 30% in Q1 2022, while Howden found premiums almost doubled from May 2021 to May 2022.
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As per GlobalData’s 2021 UK SME Insurance Survey, 17.3% of SMEs in the UK that did not have cyber insurance stated that policies are too expensive. This highlights how big an issue this is going to be for cyber insurers going forward. Premiums have increased significantly since then, and businesses are facing a cost-of-living crisis – meaning sky-high fuel and energy prices as well as consumers having less disposable income to spend. Furthermore, the leading reason SMEs cancelled a cyber insurance policy in 2021 was because they needed to cut costs (29%).
SME budgets will be much more squeezed in 2022 compared to 2021, so we expect this rate to rise. This inability to afford cyber insurance premiums will leave SMEs more exposed to cyber risk in 2022. Similarly, insurers are less willing to take on cyber risk, so many policies are less comprehensive – meaning that even SMEs with cover may be more exposed to risk in certain areas. But insurers cannot respond by lowering premiums, as the Russia/Ukraine conflict and continued working from home has increased the level of cyber risk to businesses.
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