As more small and medium enterprises (SMEs) begin to digitize part or all of their business, the need for cyber cover has gained prominence more than ever before. However, less than a third of UK SMEs held cyber insurance in 2018, according to GlobalData, a leading data and analytics company.
The company’s latest report: ‘UK Commercial Insurance Distribution 2019’ reveals that brokers dominate the distribution of commercial insurance products, especially among large companies, due to their complex insurance needs. However, there is much more competition within the SME space, with the direct channel being more popular with smaller companies.
Yasha Kuruvilla, Associate Insurance Analyst for GlobalData, comments: “The vast majority of UK SMEs did not hold cyber insurance in 2018. Those who are regarded as experts in this field have a huge opportunity to strengthen their position in the market. Cyber insurance is a fairly new product and business owners may struggle to comprehend it. Brokers are likely to come to mind first for those wishing to purchase cover.”
In fact, 42% of SMEs purchased their cyber insurance through a broker in 2018 and a further 17% purchased via a price comparison site – often introducers for brokers for commercial products, according to GlobalData’s UK SME Insurance Survey.
Kuruvilla concludes: “Cyber insurance could be the key for brokers to control the distribution of commercial insurance among not only large corporations but SMEs as well. SMEs often have simpler insurance needs, which necessitates them to go directly to the insurer and take control of the purchasing process themselves. However, most of them will struggle to purchase cyber insurance without advice, opening the door for brokers to capitalize and offer them a one stop shop for all their insurance needs.”
Survey data is taken GlobalData’s 2018 UK SME Insurance Survey of 2000 respondents.