Nearly 30% of small and medium enterprises (SMEs) terminated their cyber insurance policies in 2021 due to cost reduction.
The price of cyber insurance is likely to still be too high for UK SMEs, according to a GlobalData survey published on Friday. 38% of these companies think they are unlikely to be targeted by a cyberattack while 29% canceled their policies in 2021.
The data and analytics firm conducted the survey between August and September last year, where it explored the behaviors, purchasing preferences and attitudes of SMEs across commercial insurance products. Each company included in the survey had fewer than 250 employees, with 2,001 companies surveyed in 2021.
GlobalData noted that as the risk of attack increases, so do the rewards. He said that since cost cutting is one of the main causes of policy cancellation, this will be a significant hurdle.
The company added that the war between Ukraine and Russia has only increased potential cybersecurity risks. He pointed out that the UK’s National Cyber Security Center (NCSC) advised all organizations in the country to strengthen their cyber security in March 2022, particularly in view of the increased risk associated with war.
“Even if UK SMEs are more concerned about their business being targeted by cybercriminals, they are unlikely to be willing to pay even higher premiums to protect themselves,” said Ben Carey-Evans, senior insurance analyst at GlobalData. “It is a difficult product for insurers to price because unlike other products they cannot seek to limit risk – any SME can fall victim to a cyberattack at any time, and the costs can be important.”
This is the biggest challenge for the NCSC as SMBs are more vulnerable because they don’t take cyber hygiene seriously, said Muttukrishnan Rajarajan, professor of security engineering and director of the Institute for Cyber Security. from the City University of London. This, in turn, makes them the most vulnerable targets for a cyberattack.
Rajarajan taught the basics of cybersecurity to CEOs and CTOs as part of a program at the university. He found that most people at the companies he taught did not take cybersecurity seriously and were unaware of cyber insurance.
“Interestingly, a few came back to me after a few months of classes and told me they had been attacked and needed help! So I could see firsthand the impact of these SMEs without any cybersecurity protection,” he explained.
A good cyber insurance policy should provide employee training that specifically targets areas of risk within a company, said Steve Arlin, vice president of Americas, UK and APAC at ProLion.
“It can cover the loss of revenue resulting from a data breach and it can also cover the cost of investigative work following a GDPR breach. While the cost of cyber insurance has certainly increased in recent years to keep up with the pace of evolution in cybercrime, it is definitely worth it.
“This is a worrying statistic because it illustrates that companies – faced with rising costs – may be looking to save money where they think it won’t matter,” he said. he added. “It’s shortsighted in the extreme.”
Small businesses were warned in December 2021 to prepare for a possible increase in ransomware attacks in 2022 as cybercriminals turn to campaigns less likely to elicit coordinated law enforcement action. A report has revealed that cybercriminals are adapting to increased pressure from law enforcement agencies which have launched several successful operations to dismantle criminal networks.
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