SMEs potentially priced out of cyber cover due to ‘ongoing issue’ of rising premiums

Small and medium-sized enterprises (SMEs) could be “priced out” of buying cyber insurance in 2023 as escalating premium costs will continue to be “an ongoing issue for the cyber insurance industry” next year, according to Lawrence Perret-Hall, commercial director at cyber security business CYFOR Secure.

Looking ahead at cyber insurance trends for 2023, Perret-Hall explained that “the combination of sophisticated cyber threats and the [current] challenging economic climate means [that] some SMEs may be priced out of insurance cover completely”.

Despite this short-term trajectory, Perret-Hall also believes that the cyber insurance market “will eventually reach some level of stability” – although “finding a happy medium between making profit, supporting business risk and staying affordable” is “going to take time”.

Evaluating risk

To achieve more sustainable and stable cyber insurance pricing, Perret-Hall thinks the way in which insurers quantify these risks will have to change.

He explained: “Instead of looking solely at the sensitive data a business holds and the financial consequences of a breach, [insurers] will also start to take into consideration [businesses’] level of protection – what they’re doing to improve their security posture and how proactively they’re identifying and mitigating threats.

“What’s more, how [insurers] measure [cyber] risk will undoubtedly start focusing less on a lengthy and complex questionnaire and instead begin to utilise solutions like vulnerability scanning to get a more accurate picture of a customer’s cyber hygiene.”