Increased remote working, greater awareness, and media attention are the main reasons leading UK SMEs to purchase cyber insurance, rather than firms being on the receiving end of an attack before purchasing.
According to GlobalData’s 2021 UK SME Insurance Survey, 24.9% of SMEs say that they purchased cyber insurance due to increased remote working as a result of COVID-19. Reports of cyberattacks in the media maintain the importance of cyber insurance to business leaders, with 21.6% of firms purchasing this cover based on media coverage. This compares to just 11.3% who said their company had been a victim of a cyberattack, and just 7.8% who said they had personally been a victim of an attack. This goes to show how businesses are becoming more proactive in mitigating their risks of a cyberattack in the knowledge that home working can lead to greater risks in this space.
The survey also reveals that only 31.5% of UK SMEs have cyber cover. This is driven by many small- and micro-sized firms believing that their business is not threatened by cyber risk, as well as the price of cyber insurance. In all, 38.1% of SMEs that do not hold cyber insurance believe that it is unlikely their company will be targeted by a cyberattack, while a further 17.2% believe that the cover is too expensive.
Brokers will play an important role in advising customers to take the right level of cover, ensuring that firms are protected from cyber threats. In fact, 21.9% of businesses stated that they were advised by a broker to purchase cyber insurance. Financial advisors also have this responsibility in ensuring that UK SMEs have the cover that they need to protect their business against the growingly hostile cyber landscape. Targeting the underserved small- and micro-sized firms is key to winning future business in this space.
For the insurance industry moving forward, it is important for providers to assist businesses in purchasing the level of cyber insurance that most suits their individual needs. The arrival of Amazon, with its high levels of innovation and product development, into the UK cyber insurance market through a partnership with insurtech Superscript will encourage other providers to create more client-centric products that businesses of all sizes can take out to stay protected.