What’s Driving the Cyber Insurance Boom for SMEs?

Cybercrime is no longer just a “big business” problem. In fact, small and medium-sized enterprises are now some of the most frequent targets of cyberattacks in Australia. From phishing emails to ransomware and fake invoice scams, even a single incident can cost a small business tens of thousands of dollars. In some cases, it can even threaten the survival of the business.

It’s no surprise then that Cyber Liability insurance has seen a surge in demand.  But what key factors are driving this demand for small business owners?

The rise of Cyber Liability insurance among SMEs

Many small businesses in Australia have always assumed they are too small to attract the attention of cybercriminals. For years, the feeling has been that they can safely fly under the radar while larger corporations and government organisations and agencies bear the brunt of cyberattacks and data breaches.

However, this perception is changing as more small businesses realise just how vulnerable they are to cyberattacks.

Akshaye Kalkura, virtual Chief Information Security Officer of BizCover, says, “Small businesses don’t have the same operating budgets as larger companies, so they typically have less robust cybersecurity measures. Cybercriminals know this, which is why small businesses so often become the target of cyberattacks and data breaches.”

As awareness grows, more SMEs are recognising that cyber insurance isn’t just something that’s “nice to have.” It’s becoming an increasingly essential part of running a business.

In fact, BizCover has seen a significant increase in the amount of Cyber Liability insurance policies purchased by small Aussie businesses. Cyber Liability policy sales grew 85% between FY22 and FY25, with a 49.5% increase in the past year alone.

The latest cybercrime statistics impacting small businesses

Still think your business is too small to become a victim of a data breach? Research shows that small businesses made up 43% of all cybercrime targets in Australia. That’s almost one in every two attacks aimed at small businesses. What is potentially even more alarming is that the average cyber incident will cost a small business around $49,600 – a huge bill for any small business owner.

Small business’s vulnerability, combined with the increasing reliance on digital tools for everyday operations (such as cloud-based storage to online payments and booking systems) means SMEs face many of the same risks as their larger counterparts. The difference is that a single cyber incident can hit a small business much harder, sometimes threatening its survival.

What’s driving the uptake of Cyber Liability insurance?

What are the key drivers behind the recent surge in Cyber Liability insurance sales among small business owners in Australia? Akshaye Kalkura shares his views on why he believes demand is growing so quickly.

1. Growing cyber threats

Sometimes it feels like there’s news of a major data breach every day. From Salesforce to BMW and even the Australian Human Rights Commission, cyber incidents are increasing and becoming more complex and harder to detect.

Cyberattacks have become everyday risks for businesses of all sizes. What’s particularly worrying for SMEs is that just one incident can grind operations to a halt, leaving them unable to trade for days or even weeks. In the worst-case scenarios, businesses may even be forced to shut their doors. The cost of recovery for a small business – from restoring systems to notifying customers and handling reputational fallout – can quickly spiral out of control.

“Email compromise, fake invoices and simple human error can all contribute to small businesses becoming the victims of cyberattacks,” says Kalkura. “No-one thinks they’ll become the victim of a cyberattack, but the truth is that Aussie small businesses are increasingly at risk as cyber threats continue to evolve.”

2. Regulatory pressures and compliance

Another major driver behind the rise in cyber insurance uptake is the tightening of data protection regulations. Governments are introducing stricter privacy laws and heavier penalties for breaches, which means businesses are being held to higher standards of accountability than ever before.

For SMEs, the implications are serious. A data breach doesn’t just result in lost revenue. It can also bring regulatory investigations, legal fees and fines.

“Heavier penalties for data privacy breaches means that businesses aren’t willing to take chances when it comes to protecting customer data. They know what’s at stake,” says Kalkura.

This kind of support offered by Cyber Liability insurance can help to ensure businesses can remain compliant and resilient even under increasing regulatory pressure.

3. Awareness and education

In the past, many business owners assumed that investing in IT security alone was enough to keep them safe. While strong security systems remain essential, there is now greater awareness and understanding that no system is foolproof. Attacks are constantly evolving and even the best defences can be breached.

“Business owners understand the need for cybersecurity, and they can also see how Cyber Liability insurance fits in,” observes Kalkura. “Cybersecurity isn’t a replacement for Cyber insurance, and vice versa. They work together to help protect businesses from the worst-case scenarios.”

The cost of doing nothing: Real-world cyberattack insurance claim

What would you do if this happened to you?

A BizCover customer, Mr Smith, received a phone call from someone purporting to be from NAB (Mr Smith’s bank). Of course, this was a social engineering scam phone call, and the threat actor advised Mr Smith that his NAB bank accounts were currently being hacked. Mr Smith was directed to urgently transfer money from both his personal and business accounts to alternative “safe” accounts.

Alarmed and completely caught off guard, Mr Smith transferred approximately $329,000 from his accounts.

Within minutes of this occurring, Mr Smith realised that he had become the victim of fraud and contacted NAB. The bank was able to recover approximately $64,000 of the misappropriated funds and would continue trying to retrieve the remaining funds.

Luckily, Mr Smith held Cyber Liability insurance which also included optional cover for social engineering. Mr Smith notified his insurance provider immediately, and the insurer paid out a total of $99,000.

Why you might want to consider Cyber Liability insurance now

Here are just five reasons why you may wish to consider Cyber Liability insurance if you’re a small business owner. If you operate any part of your business online – from point of sales machines to an online booking system – then you could be at risk of a cyberattack.

1. Financial protection when it matters most

“The risks small businesses face if they don’t have adequate Cyber Liability cover can be financial as well as reputational,” explains Kalkura.

From lost revenue during downtime to costly legal bills and reputational damage that takes months (or even years) to repair, the fallout from a cyber incident can be devastating. Without adequate cover, these expenses fall squarely on the business owner’s shoulders.

2. Practical support beyond the payout

“Cyber Liability insurance doesn’t just help businesses cover the cost of a claim,” explains Kalkura. “It also offers support like a 24/7 help line, crisis management, forensic cyber investigator services, and help paying legal costs like fines and penalties resulting from a third-party claim.”

This kind of hands-on assistance can mean the difference between a quick recovery and extended business interruption.

3. Affordable and scalable for SMEs

 A common misconception is that cyber insurance is too costly for smaller businesses. In reality, policies are designed to be scalable and accessible. Costs vary depending on industry, location, business size, and claims history, but they are often manageable for most SMEs. For context, BizCover customers pay an average of $134 per month* for cover – which is a fraction of the potential cost of a serious breach.

4. Coverage tailored to meet evolving threats

Cyber threats are constantly evolving. From phishing scams to ransomware and social engineering fraud, businesses need to be constantly vigilant when it comes to spotting cyber threats.

BizCover offers a range of Cyber Liability insurance policies from leading Australian insurance providers, meaning most businesses are able to find an affordable policy that meets their needs.

5. Meeting customer and partner expectations

Increasingly, clients and business partners expect SMEs to demonstrate strong data protection practices. Having cyber insurance in place signals a serious commitment to security and risk management, which can be a competitive advantage.

Why business owners are choosing Cyber Liability insurance now

Running a small business comes with enough daily challenges. Knowing that a safety net is in place if something goes wrong provides invaluable peace of mind, allowing business owners to focus on growth rather than worrying about “what if” scenarios should they be hit by a cyberattack.

BizCover makes it quick and easy to get multiple quotes online for Cyber Liability insurance. If you’re ready to compare quotes, we can help get you covered in minutes.

* Customer Average Monthly Payment Report is based on 1 July 2023 to June 2024 and presented as a guide only.

The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. BizCover is not authorised to provide claims handling and settling services. This means we cannot assist with, manage, or settle any claims on your behalf or on behalf of your insurer. Coverage for claims on the policy is determined by the insurer, and not BizCover.