5 months ago

1 in 5 SMEs Unaware of Cyber Insurance

In an era when digitisation shapes the business landscape, the threat of cyber attacks looms large, casting a shadow over businesses of all sizes. New research conducted by Aviva has unearthed alarming statistics, revealing that one in five businesses in the UK fell victim to a cyberattack in the past year.

As the digital world evolves, SMEs may find themselves grappling with the implications of increasing cyber threats.

A Growing Challenge

Aviva's study, which surveyed over 1,200 businesses spanning various industries, highlights a concerning reality. Cyber incidents have now surpassed physical thefts and fires as the leading risk faced by British business owners. SMEs, in particular, are vulnerable.

Despite the escalating risk, a notable gap remains in the adoption of cyber insurance. A mere 36% of British businesses report having some form of cyber coverage. This disparity is even more pronounced among SMEs, where less than one in five have a policy, and an equivalent proportion is unaware that such insurance even exists.

A shocked woman looking at a computer screenStephen Ridley, Aviva's Head of Cyber, said: "The low take-up of cyber insurance, coupled with the relatively high incidence of an attack, highlights the serious nature of the cyber risk facing businesses."

The study also sheds light on the differing rates of cyber insurance adoption based on business scale. ‘Mid-market’ businesses lead the way, with 51% having coverage, followed by the large corporates at 45%. SMEs are being left behind, with only 17% holding a cyber insurance policy, indicating a critical need for increased awareness.

Diving into the Data

Aviva’s research identifies the top concerns businesses harbour regarding cyber attacks, with loss of data at 54%, malware attacks at 46% and operational disruption at 43%. Among those affected, disruption to operations is a significant and costly issue with 31% of victims impacted. Financial losses amount to an average of £21,000 per incident.

56% of businesses express confidence in their cyber security measures, even as only 51% claim to know the necessary steps to take in the event of an attack. Among SMEs, a mere 39% report knowing the related protocols.

What Does Cyber Security Cover?

Cyber insurance, sometimes called ‘cyber liability insurance’ or ‘cyber risk insurance’, is designed to shield businesses from the inherent risks associated with storing and managing digital data. This coverage extends to the accountability of a company in the event of data breaches involving sensitive customer or employee information.

Instances that warrant a cyber insurance claim include unintentional and intentional breaches, including accidental breaches caused by an employee and targeted attacks involving hacking, extortion or ransomware.

Cyber insurance provides coverage for various financial aspects including:

  • Investigating the incident

  • Recovering lost data

  • Restoring computer systems

  • Identifying and eliminating viruses

  • Potential loss of income

  • Costs associated with reputation management

  • Payments for extortion demanded by attackers

  • Claims from third parties seeking damages

  • Hiring IT professionals to address the issue

  • Legal expenses

The Bigger Picture

It’s becoming increasingly imperative for businesses, especially SMEs, to fortify their cyber security. Aviva's research serves as a wake-up call, highlighting the urgent need for enhanced resilience and the adoption of specialised insurance policies.

Businesses, brokers and insurers should collaborate in closing the cyber protection gap, ensuring a robust defence against the escalating risks of the digital age.

Find a Cyber Insurance Policy

At BusinessComparison, we can empower your business to navigate the intricate landscape of cyber insurance and discover the most fitting policy tailored to your unique needs. Our team of experts provide a comprehensive comparison of various cyber insurance options, considering factors such as coverage, cost and specific business requirements.

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Sam White