Expect cyber insurance cancellations this year

Rising cyber threats and soaring premiums will make cyber insurance cover even more unaffordable for many UK SMEs, according to data analytics specialist GlobalData.

The situation is such that it expects a number of business will decide not to renew their cover in the coming months.

GlobalData expects that many SMEs will leave themselves exposed to cyber risk in 2022 due to high cyber insurance premiums and the cost-of-living crisis pinching disposable income. 

A survey by company found that 17.3% of SMEs did not have cyber insurance in 2021 due to it being too expensive, while 29% cancelled their policy to cut costs. 

Smaller businesses were found to be most exposed to rising costs, as only 21% of micro businesses had cyber insurance, compared to 40.1% for small businesses and 54.3% of medium businesses.

Ben Carey-Evans, senior insurance analyst at GlobalData, commented: “With SME budgets being squeezed, and insurers not being able to lower the costs of premiums, the rising costs will be a big issue for cyber insurers going forward. Businesses and consumers have been hit hard by the cost-of-living crisis, with sky-high fuel and energy prices leaving consumers with a smaller disposable income to spend. GlobalData expects the number of businesses cancelling their cyber insurance policy to only increase this year.”

The company added that the war in Ukraine and employees continuing to work from home has increased the level of cyber risk to businesses in the UK, so insurers cannot respond to the cost-of-living crisis by lowering premiums.

According to GlobalData’s report, ‘Cybersecurity – Thematic Research’, innovation will be needed to counter the continuously evolving cyberthreat landscape, which includes the fallout from the Ukraine-Russia conflict. 

According to GlobalData estimates, the global cybersecurity industry will grow from $125.5 billion in 2020 to $198 billion in 2025 at a compound annual growth rate (CAGR) of 9.5%.

David Bicknell, thematic analyst at GlobalData, added: “No one—not even security providers themselves—is safe from attack. Today’s always-connected world offers a myriad of opportunities for cyber-attackers to disrupt countries, organisations, and individuals. A challenging worldwide geopolitical environment exacerbated by the COVID-19 pandemic—and, since February 2022, the Ukraine-Russia conflict—has gifted cyber-attackers an uneven playing field, which they are actively exploiting.

“The Biden administration’s top cyber officials recently warned that more frequent cyberattacks are the “new normal” for US companies and individuals. Or to put it more starkly, things are bad out there and they’re unlikely to get better anytime soon.”

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