UK Cyber Insurance Surge: Why SMEs Need Stronger IT Support and Cyber Security - 19 Nov 2025

In 2024, UK insurers paid out a total of 197 million pounds in cyber insurance claims, a 230 percent increase from the previous year. This was largely caused by ransomware and malware incidents. Yet many small and medium-sized businesses (SMEs) still operate without adequate cyber insurance, leaving them exposed.

The Insurance Gap: Why SMEs Are Still Underprotected

A report from the Association of British Insurers highlights a severe cyber protection gap among smaller firms. Many SMEs mistakenly think they are too small to be targeted and do not purchase cyber insurance.

At the same time, insurers warn that SMEs must strengthen their cyber defences. Their advice includes better phishing protections, access controls, and regular staff training.

What Is Driving the Increase in Cyber Claims?

• Ransomware and malware now account for more than half of all cyber insurance claims. 
• Insurers are demanding stronger security controls, such as multi-factor authentication, patch management, and incident response plans.
• The financial cost of cyber incidents is growing, including ransom, business interruption, data recovery, and regulatory fines. 

Why Cyber Insurance Alone Is Not Enough

While cyber insurance provides financial protection, it is not a substitute for strong security. Many SMEs are under-resourced and lack mature resilience strategies.

Insurers increasingly require evidence of strong security before offering coverage. Without proper defences, some claims may be rejected or premiums may rise. 

How Virtec Can Help SMEs Build Resilience

• Cyber Security Services to strengthen systems and reduce risk
• IT Audit to identify vulnerabilities
• 24/7 system monitoring for early detection of threats
• Secure backup systems to ensure recovery after incidents
• Security Awareness Training for staff
• Cyber risk advice to improve resilience and eligibility for insurance

Immediate Steps for SMEs

1. Review current cyber risk exposure and insurance coverage
2. Implement required security controls to meet insurer requirements
3. Patch and update all software regularly
4. Create and test an incident response plan
5. Train staff to recognise phishing and ransomware attempts
6. Work with an IT partner for prevention, not just recovery