Protect Your Business: Why Every MSME Needs Cyber Insurance

The digital age has empowered businesses of all sizes, but it’s also opened the floodgates to cyber threats. For Micro,Small, and Medium Enterprises (MSMEs) in ASEAN, the risks are particularly acute. These entrepreneurial pillars of the economy are increasingly targets for cybercriminals, with ransomware attacks, data breaches, and financial losses becoming commonplace.

The urgent need for protection

Cybersecurity is no longer a luxury; it’s a necessity. Yet, many MSMEs are ill-equipped to handle the sophisticated threats they face. This is where cyber insurance steps in as a vital safety net. It not only offers financial protection against cyberattacks but also provides crucial support for incident response and recovery.

Beyond financial coverage

While financial compensation is essential, cyber insurance is more than just an insurance policy. It’s a strategic tool for risk management. By partnering with insurers, MSMEs gain access to expertise in cybersecurity, helping them identify vulnerabilities, implement preventive measures, and build resilience.

The common types of cyber insurance coverages offered in many regions, including ASEAN:

Core Coverages

  • First-party coverage. Covers direct financial losses to the insured organization, such as business interruption, data recovery, and system restoration costs.
  • Third-party liability coverage. Protects the insured from claims made by third parties for damages resulting from a cyber incident, such as data breaches or system failures.
  • Cyber extortion coverage. Covers ransom payments and related expenses in case of ransomware attacks.
  • Media liability coverage. Protects against claims arising from copyright infringement, defamation, or other media-related issues.
  • Crisis management expenses. Covers costs associated with public relations, legal counsel, and other expenses incurred during a cyber crisis.
  • Cybercrime coverage. Protects against financial losses due to cybercrime, such as phishing, online fraud, and identity theft.
  • Data breach response coverage. Covers costs associated with notifying affected individuals, credit monitoring,and public relations efforts.
  • Business interruption coverage. Provides financial protection for lost income during a business interruption caused by a cyberattack.

How much does a cyber insurance policy cost?

Determining the exact cost of cyber insurance is highly variable and depends on numerous factors, including:

  • Company size and industry. Larger companies with more complex operations typically pay higher premiums.
  • Annual revenue. Higher revenue often correlates with higher insurance costs.
  • Number of employees. More employees can increase the risk profile.
  • Data volume and sensitivity. Handling sensitive data (e.g., financial, healthcare) usually leads to higher premiums.
  • Cybersecurity measures. Strong existing security measures can lower premiums.  
  • Coverage limits and deductibles. Higher coverage and lower deductibles result in higher premiums.  
  • Location: Geographic location can influence pricing due to varying risk levels.

That said, we can provide a general range for small to medium-sized businesses (SMBs) to give you a starting point.

Typical Cost Ranges for Cyber Insurance

  • Small businesses: Annual premiums can range from $1,000 to $5,000, with some policies starting as low as $500.
  • Medium-sized businesses: Premiums can range from $5,000 to $20,000 or more, depending on the complexity of the business.

Please remember that these are rough estimates. The actual cost will vary significantly based on the factors mentioned above.

Breakdown of Coverage Costs

Providing specific cost ranges for individual coverage components is difficult without knowing your specific business needs. However, you can generally expect the following:

  • Cyber liability coverage. This is often the core coverage and can represent a significant portion of the premium.
  • Data breach response coverage. Costs can vary widely based on the size of your customer base and the sensitivity of the data involved.
  • Business interruption coverage. The cost will depend on your revenue and the potential impact of a cyberattack.
  • Cyber extortion coverage. This is often an additional coverage with a separate premium.

To get an accurate estimate for your business, it’s essential to work with a qualified insurance broker. They can assess your specific risks and recommend appropriate coverage options.

Company Name Scope
AIG Global
Chubb Global
Allianz Global
Zurich Global
Lloyd’s of London Global
AXA Global
Tokio Marine Global
MSIG Insurance Regional (Asia Pacific)
Sompo Japan Regional (Asia Pacific)
FPG Insurance (Philippines) Local
Malayan Insurance (Philippines) Local

Key Considerations for Businesses

When selecting a cyber insurance policy, businesses should consider the following:

  • Coverage breadth. Ensure the policy covers a wide range of cyber risks relevant to the business.
  • Policy limits. Verify that the policy limits are sufficient to cover potential losses.
  • Deductibles. Understand the deductible amount and how it affects claims.
  • Insurer reputation. Choose a reputable insurer with a strong track record in cyber insurance.
  • Policy exclusions. Be aware of any exclusions in the policy that may limit coverage.

To obtain specific information about cyber insurance policies available in the Philippines or other ASEAN countries, it is recommended to:

  1. Contact local insurance brokers or agents. They can provide information on available policies and assist with policy selection.
  2. Research online. Many insurance companies offer online tools and resources to compare policies and get quotes.
  3. Consult with cybersecurity experts. They can help assess your business’s cyber risks and recommend appropriate insurance coverage.

Evaluate your business’s specific needs and conduct thorough research. Select a cyber insurance policy that provides adequate protection against cyber threats.