A “substantial proportion” of British small businesses lack cyber insurance, mostly because they do not consider themselves likely targets for hackers, according to research group GlobalData. 

This year’s UK SME Insurance Survey finds just 40.2% of small and medium companies have cyber cover.

Only 13% of sole traders hold policies, compared with 63% of mid-sized businesses (50-249 staff).

GlobalData says the Association of British Insurers put cyber insurance claim payouts at £197.3 million ($398.05 million) last year, more than triple the £59.7 million ($120.44 million) paid in 2023. 

The average claim cost £276,000 ($556,822), up from less than £113,000 ($227,974) in 2023.

“Average payouts are likely to go up, as there is no sign of abatement,” GlobalData lead insurance analyst Beatriz Benito said. “[This year] has been characterized by a string of high-profile attacks, with well-known brands Harrods, Marks & Spencer and Jaguar Land Rover impacted.

“In fact, Jaguar Land Rover was not covered by cyber insurance, signaling that while adoption levels are higher among larger businesses, coverage is still not universal among large corporations.

“SMEs are more vulnerable, as they are inherently less resilient. Insurers should look to develop more tailored solutions given that many smaller businesses operate on tight margins, often viewing cyber insurance as an unnecessary expenditure.”