Small businesses in the U.S. face a significant gap between understanding cyber risks and actually purchasing cyber insurance. Many owners are aware of the threats posed by digital attacks but often think they are too small to be targeted. This mindset leads them to hesitate when it comes to investing in protection.
James Hajjar, the chief product and risk officer at Hartford Steam Boiler (HSB), emphasizes that this disconnect is a major challenge in the insurance sector. HSB has recently launched a new suite of cyber insurance tailored specifically for small and micro enterprises, aiming to close this gap.
According to Hajjar, about 45% to 50% of small business owners recognize the dangers of cyber threats. However, many still believe that their size makes them less likely to be attacked. This creates a large divide: they acknowledge the risk but do not see it as a personal threat.
One of the biggest hurdles in selling cyber insurance is psychological. Many small business owners assume that without large data sets or advanced systems, they won’t be targets. However, Hajjar points out that cybercriminals exploit vulnerabilities, and small businesses often lack the sophistication needed to defend against attacks.
To overcome this mental barrier, HSB has found that storytelling is more effective than technical jargon. Sharing real-life examples of small businesses that have fallen victim to cyber fraud can resonate more with potential clients. Hajjar notes that even simple scams, like phishing, can catch someone off guard.
Cost is another significant barrier. Many businesses view cyber insurance as a luxury rather than a necessity, especially those operating on tight budgets. Hajjar suggests that highlighting the value of included prevention services can change this perception. Many modern cyber policies offer tools like dark web monitoring and vulnerability scanning, which can prevent attacks before they happen.
HSB’s cyber suite includes features that actively monitor clients’ websites for vulnerabilities and provide ransomware prevention services. Hajjar believes these proactive measures can be just as valuable, if not more so, than the insurance coverage itself.
As cyber threats continue to evolve, so must the insurance products designed to protect against them. Hajjar notes that while ransomware incidents decreased in 2023, there are signs of a resurgence. This is why HSB is committed to continuously updating its offerings with the latest threat intelligence.
For agents and brokers working with small and medium-sized enterprises (SMEs), it’s crucial to recognize that cyber insurance is becoming essential. Every business, regardless of size, has vulnerabilities. If a small business loses access to its systems, it can struggle to operate effectively.
As the landscape of cyber risk changes, raising awareness and encouraging small businesses to invest in cyber insurance will be vital in protecting them from future threats.