Cyber insurance is tailored cover for the risks associated with cyber breaches and other forms of cybercrime. A cyber insurance policy can cover for the costs related to data recovery, legal fees, customer notification, and public relations efforts. It can also provide some cover for business interruption, allowing you to manage your overheads while you deal with the issue.
Read our full guide to what cyber insurance is, and what it covers.
Too many SMEs seem to think that cyber insurance is a niche product that is only necessary if you operate in certain industries. Yet all businesses, regardless of their size or sector, should consider cyber insurance. In this post, we will list eight reasons why.
1: Cybercriminals actively target small businesses
Think your business is “too small” to be of interest to cybercriminals? Think again.
Cybercriminals will not overlook your business because of its size.
One study found that cybercriminals are three times more likely to target SMEs over larger businesses. Another suggested that around 96% of all cyberattacks target SMEs.
2: Many SMEs are powerless to resist cyber attacks
One reason why cybercriminals target SMEs is because they know that smaller businesses are less likely to have robust cybersecurity systems in place. This means that, if they target you with a ransomware attack, for example, you will have no choice but to pay.
3: Cyber threats are getting harder to spot
Phishing is a very common form of cyberattack in which cybercriminals send a fraudulent email that claims to be from a trusted source. This could be a bank, a shopping platform, a manager, or a colleague.
Phishing messages trick the individual into sharing sensitive information, such as login details. This can give cybercriminals access to your systems while leaving you vulnerable to other forms of cyberattack.
Fake phishing messages are getting increasingly difficult to spot. There’s a growing threat of cyber criminals using AI modules to create phishing emails that are so realistic that they could fool even the most seasoned of cybersecurity expert.
4: Cybercrime carries a huge cost
The UK government’s cyber security survey found that, for UK businesses, the average cost of a single security breach was between £1,100 and £4,960. Would your business be able to bounce back from such an expense?
5: Cybercrime is getting more expensive
IBM recently surveyed 604 organisations and 3,556 cybersecurity and business leaders who had been hit by a data breach. They found that the global average cost of a data breach in 2024 was $4.88m. This is the highest it’s ever been, and it represents a 10% increase over the previous year’s figures.
6: A cyberbreach will cost you more than you might think
Following a cyberbreach, your business will take a significant financial hit. But the blow to your reputation could be much more damaging.
How many current and potential customers would you lose if you create the impression that you cannot be trusted to handle sensitive customer information?
And what if, in the investigations following the cyber breach, it is found that your business did not do enough to secure your customers’ sensitive data? This could imply you are in breach of GDPR, which could carry further fines.
7: Businesses can feel the impact of a cyberattack for years following the breach
A 2023 government survey found that 88% of businesses hit by a cyberattack were able to restore their operations within 24 hours of the attack. A separate study found that the average amount of downtime following a cyberattack was 24 days.
Yet some cyberattacks are so severe that recovery takes years. The Scottish Environment Protection Agency was hit by a ransomware attack in December 2020. As of February 2024, they were still rebuilding their systems.
Plus, it might be rare, but it does happen – sometimes a cyberattack is so severe that it sinks a business completely.
8: Cyber insurance can determine how effectively your business recovers from the attack
The amount of time it takes your business to recover from a data breach will depend on the severity of the attack, along with how effectively you can respond.
While cyber insurance will not protect your business from cyberattacks, it will at least ensure that you will have the means in place to respond to a breach.
With cyber insurance, you can get comprehensive cover for the costs related to data recovery, legal fees, customer notification, and public relations efforts. A cyber insurance policy can also provide some cover for business interruption, allowing you to manage your overheads while you deal with the issue.
Without a cyber insurance policy, a data breach could ruin you. But get the cover you need today, and you will have peace of mind that you will be able to bounce back from even the most severe of breaches.
Get Tailored Cyber Insurance for Your SME
James Hallam is an independent Lloyd’s broker with access to a hand-picked selection of A-rated insurance providers. We can help you find the cyber insurance you need at the best possible price.