The cyber insurance market for SMBs grew by an average of 69 percent per quarter over the past year, according to the results of a recent study from the online cyber insurance marketplace CyberPolicy.
The study also found that customers are requesting higher insurance limits, with fully 90 percent of SMBs buying policies with coverage limits between $1 million and $5 million.
At the same time, premiums are decreasing. In April of 2017, the average monthly premium for a $1 million limit policy was $271 per month. In June of 2018, a similar policy with more comprehensive coverage averaged just $77 per month.
Key factors driving the cyber insurance market, according to the report, are as follows:
- Increased accessibility of SMBs to shop for and purchase cyber insurance
- Customized cyber policies making cyber insurance more affordable
- Contractual requirements from the enterprise level trickling down to third party vendors
- Passing of government regulations at the state and federal levels
Notably, the proportion of SMBs citing compliance requirements as a motivating factor in purchasing cyber insurance grew by an average of 39 percent each quarter over the past year.
And over the coming year, the report predicts, large enterprises will lead the charge on mandating cyber insurance for small businesses.
"In the past, mandating cyber insurance for SMBs was difficult, due to the lack of affordability and accessibility," the report notes. "In 2018, the emergence of digital-first insurance providers drastically reduced distribution costs, allowing organizations to enforce cyber insurance as an essential component of third-party vendor contracts."
In fact, 46.3 percent of SMBs already say their primary reason for seeking cyber insurance is to fulfill a contractual requirement.
"Security executives from larger enterprise organizations have come to realize that the one vulnerable spot in their overall attack surface is the relationship with third-party vendors," the report states. "To compensate, corporations are requiring smaller vendors that they partner with to get cyber insurance."
A $21.6 Billion Market
By 2025, the report predicts, the total SMB cyber insurance market will reach $21.6 billion, with 23 million small businesses (approximately 70 percent of the total market) seeking cyber insurance.
"In the coming years, we can expect any business with assets to secure, and long-term viability to protect, to make cyber insurance a critical element of their comprehensive cyber security plan," the report states.
Still, the vast majority of small businesses have a long way to go. A separate Insureon survey of 2,400 business owners found that just 33 percent of respondents have cyber liability insurance, up 7 percent from a year ago.
There's a simple reason for that: 84 percent of respondents said they don't feel at risk for a data breach, likely because 86 percent have never experienced one. Over half of respondents believe hackers are more likely to target larger businesses than smaller ones.
Notably, 73 percent of small business owners don't think they have customer data that would be susceptible to a cyberattack. Sixty-four percent manage their own IT needs, and 76 percent believe their business could survive a breach.
As cyberattacks continue to hit companies of all sizes, those numbers will inevitably shift, and cyber insurance will become increasingly attractive.