A new report on Cyber Risk and Cyber Risk Insurance from Argo Group, titled “Under Attack and Unprepared: Argo Group Cyber Insurance Survey 2017,” provides some interesting insights into the small and medium-sized enterprises (SMEs) Cyber Risk Insurance market. The report (see here), based on a recent survey of SMEs, noted that 73% of SMEs with revenues less than $25.0 million do not purchase Cyber Risk Insurance now.
The high rate of unprotected SMEs is surprising given that almost 66% of SMEs have been victimized by a cyberattack during the last 12 months, and more than 40% have been the victim of multiple cyber incidents for the same period. Additional findings from the report related to the SME market and Cyber Risk Insurance (also called Data Breach, Privacy and Network Security insurance coverage):
- Only 40 percent of small and medium-sized enterprises (SMEs) believe their organization is a potential cyber target.
- Slightly more than half of SMEs set cybersecurity standards for their suppliers.
- Only about six in 10 SMEs have an internal cybersecurity incident response team.
According to the report, SMEs forgo Cyber Risk Insurance because:
- they believe their in-house security is adequate.
- they think insurance is too expensive.
- there is a lack of interest by senior management or the board of directors.
A prior survey noted that more than 50% of US businesses have been hacked in the last year (see here). And there are some consistencies with surveys conducted a year ago and longer, and covered in our prior posts (here, here, & here).
Cyber Risk Insurance is an essential coverage for SMEs, and the cyber risk attack frequency noted above should be a compelling reason. Ransomware (see here) and social engineering fraud (see here) are significant exposures for SMEs, and comprehensive Cyber Risk Insurance is a critical protection. Policy forms vary widely, and so a thorough review is essential to ensure that comprehensive coverage is in place.
Tennant Risk Services is a specialty wholesale broker and underwriting manager, and delivers expertise, markets and exemplary services to our retail insurance agent clients in the placement of professional liability and specialty insurance (E&O, D&O, EPL, Cyber Risk, Specialty). We excel at hard to place accounts.