Along with taxes and death, data breaches are now a grim certainty in life. When they occur, they can bring considerable cost implications – particularly if third party information has been compromised.
Cyber liability insurance cover has been available in the market for around 10 years, although it is still relatively unheard of. Insuring against a breach is, of course, a way of transferring risk, should the worst happen. In countries with mandatory data breach notification laws, such as most of the United States, the take-up of Cyber liability insurance cover is higher. In the UK, the impending draft EU Data Protection Regulation includes mandatory notification of breaches, but the scale and timing of this new regulation is still to be determined.
As the expense of dealing with a breach gets higher – and the cost of dealing with mandatory notification is added – the option of using Cyber liability insurance cover will become more attractive for many businesses, in much the same way that existing business insurance policies for fire, flood and theft are a vital itinerary in the risk management toolkit.
Aon, leading global provider of risk management services and insurance, gives the following statistics:
- One in three UK SMEs cite online presence as key to growth
- Less than one in 10 perceive cyber attacks as a threat to business
- Seven percent of SMEs have taken out cyber insurance
The cyber insurance gap: 2015 vs. 2016
| SMEs that stated developing an online presence is one of the biggest opportunities | SMEs with Insurance against cyber attacks | Gap | |
|---|---|---|---|
| March 2015 | 24% | 3% | 21% |
| March 2016 | 31% | 7% | 24% |
At a time when the National Crime Agency has warned criminal cyber capability is outpacing the UK’s collective response, the SME community has an opportunity to increase preparation and the use of mitigation tactics. The Aon Risk study showed that nine percent of SMEs asked to pick the three biggest risks facing their business perceived cyber attacks as threats.
While the smallest businesses are significantly more likely to embrace internet-related business opportunities, the results of the survey indicated the smallest businesses are most at risk. Small businesses are more than twice as likely not to have cyber insurance as their medium-sized counterparts (6 percent compared with 13 percent).
Thirty-three percent of small businesses cited developing their online presence as a key opportunity area for their business for the year ahead, compared with 23 percent of medium sized business. Similarly, 16 percent of small businesses cited the online/ digital marketing capability of the business as important drivers influencing their business outlook for the next 3 months, compared with 11 percent of medium sized businesses.
| Small | Medium | |
|---|---|---|
| Cited developing online presence as key opportunity for year ahead | 33% | 23% |
| Cited the online/ digital marketing capability of the business as key drivers influencing their business outlook for the next 3 months | 16% | 11% |
| Have cyber insurance | 6% | 13% |
Andrew Tunnicliffe, CEO, Aon Risk Solutions UK, commented: “ it is a concern that 90 percent of SMEs have no cyber insurance in place, with many unnecessarily exposing their businesses to serious risks. At Aon, we are working hard to help SMEs anticipate and manage change in the face of an increasingly competitive market, it is important for SMEs to plan and navigate a clear path through uncertainty, managing risks before they damage their business.”
For further advise on anything you’ve read here, please call us on 0114 287 0510. We would be more than happy to help you with any aspect of cyber security for your business, including referral to insurance consultants.