17.06.25

The Importance of Cyber Insurance for SMEs

SMEs and the importance of Cyber Insurance

It has been recently reported that over half of UK businesses have suffered a cyber attack in the past year, with many experiencing disruption lasting more than 24 hours. These breaches can lead to significant financial losses, regulatory penalties, and reputational harm. Cyber Insurance for SMEs plays a crucial role in mitigating such risks, offering vital support in the event of an incident—most policies provide immediate access to expert helplines and specialist response teams.

Why SMEs Should Consider Cyber Insurance

Although every business should consider the merits of cyber insurance, there are several reasons this cover is particularly important for SMEs:

• SMEs are an attractive target for cyber-criminals. Many SMEs assume that cyber-breaches are more likely to happen to larger companies. However, according to international IT services and consulting firm Accenture¹, 43% of all cyber-attacks target small businesses. Although larger organisations may have more data that’s attractive to cyber-criminals, SMEs are often considered an easier target. Indeed, threat actors may initially target smaller businesses’ software to gain a foothold into larger businesses through supply chain attacks.
• SMEs often neglect cyber-security. Compared to larger organisations, SMEs typically have smaller budgets and limited resources for cyber-security. SMEs may also have fewer IT staff and lack the technical expertise to implement and manage effective security measures. Both factors make SMEs susceptible to cyber-attacks.
• SMEs’ employees may leave them vulnerable to attacks. Many cyber-attacks stem from human error, such as employees accidentally opening attachments containing malware. Despite this, almost half of small UK businesses don’t provide cyber-security training for employees, according to IT solutions provider Proband. Poor cyber-security awareness among staff could inadvertently expose SMEs to cyber-threats.
• Cyber-attacks are getting harder to spot. Phishing emails and similar scams are becoming difficult to detect now that artificial intelligence (AI) tools allow a cyber-criminal to seamlessly mimic a company’s tone, language and style. As such, the number of SMEs falling victim to sophisticated attacks may increase as AI evolves, especially if they lack the expertise to protect against them.
• Cyber-attacks may have financial consequences that are too severe to recover from. The lost business, operational disruption and legal consequences of cyber-attacks can take SMEs months or even years to recover from. Even if SMEs manage to recoup the monetary loss from a breach, their brand reputation may be harder to repair.

How Cyber Insurance Can Help

Cyber-insurance can provide protection for SMEs from the devastating consequences of cyber-attacks by providing helpline support in the first instance and then assistance in relation to data restoration and rectification costs, legal liability from personal or confidential data breaches, lost profits and other expenses. It may also include access to IT forensics, legal experts, public relations advisors and other specialists often lacking in SMEs, helping to expedite their recovery.

Overall, a robust cyber insurance policy can be vital in minimising downtime, restoring data, and limiting financial and reputational harm. Moreover, cyber-insurance highlights an organisation’s dedication to safeguarding client data, which stakeholders and customers may favour.

Contact us today for further small business insights and robust insurance solutions.

Information provided by Zywave with contribution from Lisa Langley, Cert CII, Team Leader, Professional Risks, Cox Mahon Ltd.

¹Accenture – a global professional services company based in the UK.

This document is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2025 Zywave, Inc. All rights reserved.