GlobalData says the price of cyber insurance is still too high for small-to-medium enterprises (SMEs), with a UK survey finding 29% cancelled their policies last year due to cost-cutting.

Interest in cyber insurance is increasing amid heightened risk due to the Russia-Ukraine war and working from home, yet the survey of 2000 businesses with fewer than 250 employees found 38% believed it was unlikely they would be targeted.

“SMEs are aware of the threat but don’t feel it is applicable to them,” GlobalData analyst Ben Carey-Evans said. “Price will continue to be a key barrier to cyber insurance uptake in the near future.”

GlobalData says as risk of attack increases, so will cyber premiums, and this will be a “significant obstacle” given cutting costs is a leading cause of policy cancellation.

Growing numbers of high-profile attacks should spark increased uptake of cybersecurity insurance, yet the issue of pricing will remain as businesses struggle with a difficult economic environment. Even if UK SMEs do become more concerned about their business being targeted by cybercriminals, they are unlikely to be willing to pay even higher premiums to protect themselves, Mr Carey-Evans said.

"It is a difficult product for insurers to price as, unlike other products, they cannot look to limit risk,” he said. “Any SME could be hit with a cyberattack at any time, and the costs can be significant.”

In March, the UK’s National Cyber Security Centre advised all UK organisations to bolster their cybersecurity as the Ukraine-Russia war heightens potential risk.