The uptake of cyber insurance by UK small and medium enterprises (SMEs) has grown from 2.1% in 2014 to 13.7% in 2016, although this is still a relatively low figure compared to other commercial products, according to GlobalData, a recognized leader in providing business information and analytics.
The company’s latest report states that, in a world where UK businesses are more dependent on the digital space, and crime is moving online, there is a greater need for cyber insurance.
Danielle Cripps, Analyst at GlobalData, explains: “Any business that holds personal information that can be sold on or used for identify fraud is vulnerable to cybercrime. SMEs are increasingly threatened by cybercriminals or system failures which a cyber insurance policy could help protect against. Indeed, SMEs could be argued to be most in need, as they have the fewest resources to recover from financial losses.”
Businesses should be focusing on improving their cyber security to prevent the compromising of personal data. While cyber insurance itself cannot prevent breaches, it has become an important tool in helping organizations recover from attacks and mitigate the impact on business continuity in all aspects of trade and reputation.
Cripps continues: “Cyber security will improve considerably in the UK as a result of the government’s new National Cyber Security Strategy and the EU’s General Data Protection Regulation. The latter, which comes into force on May 25, 2018, is expected to increase the number of companies that hold cover due to its requirement to notify both regulators and customers put at high risk about data breaches, and investigate issues with undue delay.
“Insurance will help by providing financial support, and may additionally give access to extra technical support from experts called out to help with a claim. Businesses will also have more accountability and conditions to comply with, making them more liable under the new regulation. The additional risk this creates means businesses are more likely to seek cover which will help drive the market.”
– Information based on GlobalData’s report: UK Cyber Insurance 2017.