Business owners – even many technology startups – remain vastly overconfident about both their risk for ransomware attacks and insurance they have in place to prevent them, according to a new Embroker report.
The report found that 63 percent of small and medium-sized business owners believe they’re not at risk for a ransomware attack. As well, just 28 percent said they had cyber insurance policies to address potential problems.
Additionally, just 22 percent said they have read and understood all of their policies, with half saying they are relying on their brokers to sign up for coverage.
Embroker is a California-based InsurTech that launched in 2016 as a digital insurance agency for small to medium sized businesses. It began repositioning itself in 2018 to become a licensed insurance carrier, and has raised more than $140 million in venture capital financing since its launch. It’s report is based on a survey of more than 500 business owners, CEOs and tech startup founders in August 2021.
“While many [small and medium sized business] owners and startup founders have been experiencing strong growth and financial backing in the past year, modern day risks including cyber attacks, supply and remote workforce issues can stop progress in its track,” Embroker CEO Matt Miller said in prepared remarks. “Business insurance is a critical element in a company’s growth strategy, allowing a company to effectively transfer risk and ensure that unforeseen events don’t impede their growth – it is not a decision and process you can go through on autopilot.”
Among the report’s key findings:
- Large minorities said reputational harm to the company or brand, or product/equipment malfunction were a top risk. 37 percent pointed to labor shortages or overworked employees. Owners also cited customer retention/growth, generating demand and managing costs as topo risks.
- 46 percent of business owners and 57 percent of tech founders said that they don’t have enough coverage if a ransomware attack strikes. But 63 percent of small and medium sized business owners didn’t think they’d get a data breach or ransomware attack. On the other hand, 58 percent of tech founders believed they’d probably face either risk at some point. Still, only 34 percent of tech founders said they had cyber policies.
- Half of respondents said they rely on broker expertise to sign up for overage, with 25 percent relying on them to fully research and price out options. One in 5 said they didn’t know how their insurance purchases are handled.
The full Embroker report is “Big Risks for Small Businesses.”