Warning for SMEs as insurers worried about ‘huge’ cyber exposures

Small and medium sized enterprises (SMEs) need to ensure they have the right cyber risk management in place before seeking insurance cover.

That is according to Alan Abreu, European cyber manager and member of the underwriting team at Boxx insurance, who said insurers were concerned about “huge” exposures.

He said that the major threats for SMEs were fraud and ransomware, wherein criminals pretend to be a client or a bank official and look to defraud money.

“For insurers, there remain concerns simply due to the fact that if there is a large risk, the exposures can be huge,” he explained during a webinar on cyber protection and insurability for SMEs, hosted by credit rating firms DBRS Morningstar last week (March 30 2023).

“The challenge for insureds is to try and understand the risks – no one can guarantee you will be fully protected.”

Abreu said SMEs needed to take steps to protect themselves before they looked to insurers for coverage.

He added companies had to have a disaster recovery plan for when an attack occurred – and if they were covered by an insurance policy, then it was vital to notify the insurer quickly.

“You need to create a backup and that back up needs to reflect your business model,” Abreu said.

“If you have a lot of data changing on your system, then it needs to be backed up regularly.”

Abreu also highlighted what SMEs can do to better understand the threats they faced.

He added: “It is critical to know your digital assets. You need to know how many computers and laptops you have and what systems are on each.

“Who can contact and access your system? You need to identify who had access and also look at who had administration access to your systems.

“It is like giving someone the key that unlocks every door in your house – if you do not know who had such a right, you are asking for trouble.”

’Customised solutions’

Meanwhile, Abreu said the current cyber market was viewed as hard in regards to price and terms, but that he felt the sector was undergoing a transition as it matured.

“However, I think we will be in a period of transition for some time,” he explained.

“I see the market evolving, especially in the SME space. I see customised solutions being developed.”

When asked if he thought cyber cover would become affordable, Abreu replied: “For what it provides and the risks it covers, I think cyber cover is already affordable.”