In recent findings by CyberCube, a significant cyber protection gap is increasingly impacting small businesses. This gap necessitates a collaborative effort from essential industry players—cyber brokers, underwriters, and reinsurers—to address the issue effectively.
Despite their substantial contribution to the global economy, small businesses with annual revenues ranging from $10 million to $250 million are inadequately served by the global cyber re/insurance sector. This leaves them exposed to cyber threats without sufficient coverage. Alarmingly, companies with 11 to 1,000 employees constitute 75% of ransomware victims, as per Coveware data, highlighting that small to mid-sized enterprises are prime targets for cybercriminals.
Small businesses, due to their limited advanced cybersecurity infrastructures, are more prone to large-scale breaches, allowing cyber attackers to compromise multiple entities simultaneously. According to William Altman, Director of Cyber Threat Intelligence Services at CyberCube, “This protection gap presents both an opportunity and a responsibility for brokers and (re)insurers.”
Brokers have a pivotal role in promoting cyber coverage adoption among small businesses by helping them understand its value. For (re)insurers, expanding their reach to small enterprises not only diversifies their market but also enhances economic resilience. Effective prevention and recovery from attacks by small businesses safeguard jobs, maintain supply chains, and bolster community support.
CyberCube’s report outlines several actionable strategies for closing the protection gap for small businesses:
Brokers should focus on expanding education and access to cyber insurance. They can incentivize generalist brokers to invest more time in selling cyber policies, improve communication about cyber risks, and offer pre-coverage risk assessments to guarantee adequate protection.
Underwriters can enhance risk selection and pricing by developing scalable underwriting practices tailored to small businesses. Encouraging robust cybersecurity practices and collaborating with brokers to refine policy language and services will be crucial in making cyber coverage more effective and accessible.
Reinsurers have a critical role in maintaining market stability and capacity. By establishing distinct cyber underwriting strategies for small-business portfolios, they can differentiate these from approaches designed for larger enterprises, ensuring appropriate management of cyber risk across various segments.
The growing influence of AI in enabling threat actors to swiftly and extensively scan for vulnerabilities further increases the exposure of small and mid-sized businesses to opportunistic attacks. Re/insurers must remain cognizant of this evolving threat landscape.
In conclusion, by implementing these strategies, the industry can foster a more resilient cyber insurance market that better shields small businesses against evolving threats. Proactively addressing these gaps will not only enhance coverage options but also contribute to the broader cybersecurity resilience across the small business sector.
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