86% of startups have cyber insurance cover, research reveals
86% of startups have cyber insurance protection, according to digital insurance broker Embroker, reflecting a growing understanding around cyber risk among small and medium-sized businesses.
Embroker surveyed 400 VC-backed startups in its latest cybersecurity report. It found that, as well as the 86% of startups who have cover, 68% of respondents had experienced a cyber attack on one of their businesses. In addition, seven in 10 startups are considering extending their cyber cover so that it includes even greater protection.
The findings suggest that smaller businesses understand the risk posed by cyber incidents, yet half of participants in Embroker’s survey acknowledge that their current policy would not fully cover their risk in the event of an attack or breach.
Nearly a third of startups (31%) fear they are at greater risk of cyber incidents now than a year ago, given the rise of hybrid working models and geopolitical events like Russia’s invasion of Ukraine. Embroker says it saw a 50% increase in the number of applications submitted for cyber policies shortly after the war in Ukraine broke out, saying it demonstrates how current events are “driving business decisions” around cyber risk.
‘Substantial headwinds’ affecting cyber insurance market
Despite the apparent understanding among startups, there is concern amid rising business rates about affordability. According to GlobalData, rising insurance premiums risk pricing SMEs out of the cyber insurance market entirely. In its own survey published in the summer, the market research firm found that nearly 30% of UK-based SMEs had cancelled cyber insurance policies to save money. It may prove to be a false economy, though, with the cost of a breach proving potentially devastating for an uninsured organisation.
In the foreword to the latest report, a spokesperson for Embroker says: “Today’s startups are facing substantial headwinds. Beyond the everyday challenges of running a company, building a product and trying to grow, external risks abound. Many founders are worried about a restrictive funding environment, volatile public markets and broader socio-economic shifts. Behind these headlines is another external risk that continually surfaces and resurfaces in founders’ minds: cyber risk.”
