A recent survey by QBE Insurance (Singapore) Pte. Ltd. has revealed that fewer than four in 10 small and medium enterprises (SMEs) in Singapore have cyber insurance, despite the growing threat of cyberattacks. The survey, released in February, highlights concerns over the high cost of cyber insurance as a key reason many SMEs are opting out of coverage.
According to the survey, 68% of SMEs do not have cyber insurance, with 51% of these businesses open to the idea of purchasing a policy in the future. However, 15% of companies are not considering it due to factors such as the perceived high cost, the belief that their business does not handle significant data, or the view that the risk of cyber incidents is minimal.
QBE’s report indicates that while SMEs are actively exploring various measures to combat cyber threats, insurance is not a priority. The percentage of businesses with cyber insurance coverage has decreased slightly, from 38% last year to 36% this year.
The survey also found a decline in awareness about cyber threats. Only 40% of SMEs claimed to be fully informed about these risks, down from 47% the previous year. Despite this, the number of businesses experiencing cyber incidents has risen, with 27% reporting such incidents compared to 25% last year.
Almost one-quarter of SMEs surveyed reported being victims of hacking, but fewer than 25% had insurance coverage to protect against business interruption losses, even though 74% expressed concerns about the impact of such events.
Raymond Ong, CEO of Etiqa Insurance Pte. Ltd., emphasized the need for traditional insurance models to evolve in response to the growing complexity of cyber threats. “This includes a more comprehensive approach to cyber risk, ensuring SMEs are not only covered for direct financial losses but also equipped with the necessary tools to mitigate risks before they escalate,” Ong said in an email to Insurance Asia.
The survey also highlighted a slight decline in workplace safety and health awareness among SMEs. While 78% of businesses communicated safety benefits to their employees, this figure was down from 81% the previous year.
Ong further pointed out that SMEs in Singapore are required to obtain work injury insurance for manual laborers and non-manual employees earning $1,939 (S$2,600) or less a month, with noncompliance resulting in hefty fines and operational disruptions.
He noted that the recent 50% corporate income tax rebate could encourage SMEs to invest in adequate insurance coverage, including business interruption, property, and liability insurance. “This financial cushion could help SMEs allocate funds towards essential risk management tools,” Ong added.
As businesses continue to digitalize, Ong anticipates that insurance products and services will increasingly be delivered through digital platforms. The rise of the gig economy is also expected to transform the insurance sector, with a growing demand for flexible and adaptable coverage solutions.
With the global average cost of a data breach continuing to rise—10% higher last year, reaching $4.9 million according to IBM—cyber insurance is expected to gain more traction among SMEs as they look to protect their businesses from the escalating risks of cyberattacks.
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