Cyber premiums "inaccessibly high" for UK businesses

Soaring cyber premiums are contributing to cutbacks in other areas for UK businesses. This is among the conclusions drawn by insurance and risk consultant, Mactavish, whose latest survey reflects “inaccessibly high” cyber premiums at a time when businesses are at their “most fearful of a cyber attack”.

Over half of the large businesses that have prioritised cyber protection told Mactavish that rising policy costs have contributed to cutbacks to other parts of the business – from reducing office costs and staff bonuses to cutting other types of insurance, indicating a wider impact on the risk profile of UK businesses.

While only 77% of companies surveyed believe they are covered against the risk of cyber attacks, the situation is a concerted improvement from 2018, when only 30% of large businesses had cyber specific insurance cover in place. Mactavish surveyed companies with over a 10m turnover, across industries including technology, manufacturing, aviation and maritime sectors, construction and energy.

The survey found that the main blockers for adoption are the cost of insurance (56%), inadequacy of cover (30%) and distrust into claim pay-outs (25%), which could account for the 23% of companies still without cyber cover in 2022.

The survey also reveals the war in Ukraine has led to a surge in UK businesses fearing major disruption as a result of a cyber attack. The research found that 70% of UK businesses described the potential for a cyber attack in the next 12 months as ‘considerable’ or ‘highly significant’, while nearly all (98%) of respondents admitted to feeling vulnerable to a cyber attack as a direct impact of the war.

“It would be ignorant to disregard the turbulent landscape the business world is confronted with in the face of the longest hard market on record with insurers pumping up premiums and creating long lasting hard conditions for policyholders,“ said Bruce Hepburn, CEO of Mactavish. “However, corporates must ensure they are protected against potential risks. The reality is that cyber attacks are on the rise – 79% of respondents have been victim to one in the past 12 months – and they can truly devastate a company who do not have adequate, reliable protection.

"The impact of global crises, the war in Ukraine and the sustained impact of the pandemic mean that company risk profiles have changed and it’s important that businesses adjust their insurance policies to reflect this, or they’ll fall foul to a lack of protection at a time of increased vulnerability.”

Looking at the previous twelve months, 79% of respondents revealed that they have experienced a cyber attack, with 50% of those attacks resulting in a loss of data or revenue. When compared to Mactavish’s 2018 report on the same subject, businesses are 84% more likely to suffer a cyber attack than they were four years ago.

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