As Cyber Risks Grow, So Does the Need for Small Business Coverage

With cyberattacks on the rise and many small businesses unaware of the dangers, independent insurance agents are in a good position to educate clients about their risks, recommend preventative measures, and provide protection with a cyber insurance policy. Recent statistics should be eye opening for any small business and a good way for agents to start addressing their needs.

The 2019 Global State of CyberSecurity in Small and Medium-Sized Businesses of the Ponemon Institute surveyed 2,000 businesses and found 76% of the U.S. small and medium-sized businesses (SMBs) were attacked within the last 12 months, up from 55% in 2016. There was also a rise in attacks involving deception with phishing (57%), stolen devices (33%) and credential theft (30%).

The 2019 Hiscox Cyber Readiness Report, which included 5,400 businesses, found that more small firms were attacked during the year and cyberattack “incidents are up from 33% to 47%. For medium sized firms, the proportion has leapt from 36% to 63%.” The Hiscox report stated, “Small and medium-sized firms are much more likely to have suffered multiple attacks this year, and the proportion of small and medium firms that have had an attack has increased 59%.” The report also found that the mean cost of the largest single incident increased almost six-fold, from $34,000 a year ago to just under $200,000.

When these incidents occur, not only does a business have its client and prospect files, names, addresses, credit card numbers, private data and payment methods stolen, but their brand and reputation can be damaged, losing their customer’s trust.

Plus, the recovery costs will put 60% of affected companies out of business within six months, according to the National Cyber Security Alliance. These costs include legal fees, computer forensics cost, ID monitoring and protections for their customers, public relations costs, ransom costs to buy back data, data restoration costs, litigation costs, regulatory fines, payment card fines from credit card companies, and more.

Any small business that uses computers, mobile phones, and accepts credit cards is vulnerable to attack, regardless of its location, size or type. To make cybersecurity a priority, a combination of prevention and insurance coverage is needed.

Read the full article, written by Jeff Holmes, Senior Vice President and Chief Operating Officer of SIAA, published on insurancejournal.com.