The top 5 reasons SMEs should be considering cyber insurance

By Peter Vickers Insurance Brokers | Cyber Security, Insurance |

The latest cyber report by NSW found that the cost of cybercrime to businesses in Australia is rising exponentially, costing Australians an estimated $1 billion each year. While headlines focus on global breaches such as Facebook and eBay it may appear as though SMEs aren’t in danger of being targeted. However the reality is strikingly opposite. As we discussed in our last blog, Chubb recently reported that 60% of SMEs fell subject to a cyber attack last year. Even more worrying is that small business is the target of 43% of all cybercrime in Australia, highlighting the importance of purchasing a cyber policy.

Still not convinced? Here are the top 5 reasons SMEs should be considering cyber insurance.

1. SMEs are more vulnerable than big organisations

Large global organisations have the money and resources to pour into cyber protection. However most SMEs have nowhere near the amount of resources available to fully protect the business, leaving significant risks exposed and making them an easy target for criminals. Not only this, but Keeper Security found that the greatest cyber threat to a business is its own employees with phishing and social engineering attacks being cited as the most frequent type of attack.

The greatest threat to cyber security in business is it's own employees

Credit: 2017 State of Cybersecurity in Small & Medium-Sized Businesses (SMB), Ponemon Institute and Keeper Security

2. A cyber attack could ruin your business

The U.S. National Cyber Security Alliance found that of those business who had been subject to an attack 60% had to close for business. Cyber incidents can affect your business’ bottom line but can also damage your reputation. Cyber protection not only covers business interruption costs but also legal and media liability costs.

3. It will save you money

As with any insurance policy the real costs comes when you are uninsured. Currently the average cost of a cyber breach for an SME is $1.9 million – that suddenly doesn’t feel like petty cash.

Not only this but the data breach laws are still your responsibility even if your ‘cloud’ is handled by another data company. Remember the fine alone for a data breach is $1,800,000.

4. It provides expert help

By purchasing a policy insureds can feel peace of mind that they will receive expert help every step of the way.

Before: Assessments and other steps required to complete the purchase of the policy could have a positive impact on your cyber security. Your insurer should support you in your risk management in helping to assess and protect your systems against potential breaches.
During: In the event of a cyber attack many insurers provide immediate response systems to help contain the incident, limiting potential damage and obtain data to learn from the event to prevent future incidents.
After: Having an insurance policy transfers the financial risk from your business to the insurers. This means that following an incident your insurer can handle the financial burden – allowing you to focus on other priorities. Your insurer should also review your systems to determine how to further minimise other events.

5. Cyber insurance is not included in business insurance

Just as your car insurance is not covered under your contents insurance, your business insurance does not include cyber insurance. A cyber attack can be so complex and so damaging that it warrants its only policy and it takes specialist risk assessments to determine the policy that is the right fit for your business.

But it’s not all doom and gloom, your broker can help fund the best cyber insurance that can supplements your business insurance. And it works! Ponemon Institute found that 44% of businesses would highly recommend purchasing cyber insurance.

Businesses would highly recommend purchasing cyber insurance

Credit: Managing Cyber Security as a Business Risk: Cyber Insurance in the Digital Age, Ponemon Institute

The survey also found that purchasing a policy not only reduced potential financial losses following a cyber attack or exploit, but companies’ security posture became stronger: 62% of respondents felt their companies’ ability to deal with security threats improved following the purchase of their cyber insurance policy.

To understand more about cyber insurance and the cover it provides you can learn more here. Alternatively, to talk to one of our experts you can email us using the button below.

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