In August, the Insurance Bureau of Canada (IBC) conducted a survey among 317 small- and medium-sized business owners or decision-makers. The respondents were from businesses with fewer than 500 employees and revealed that 65% of respondents are concerned that artificial intelligence (AI) and other new technologies will make it harder to defend against cyber risks.
While benefitting SMEs (small and medium enterprises) through providing efficiencies such as automating tasks, improving decision-making with data analysis, and enhancing customer service through chatbots, AI is also being exploited by cybercriminals.
For instance, AI-powered tools like ChatGPT have enabled the creation of more convincing phishing emails. Malicious actors have also deployed AI-powered bots to generate fake reviews or manipulate social media platforms to damage a business’s reputation. Automated AI systems can be used to mine sensitive data from small businesses and make them vulnerable to data breaches. Predatory lending algorithms can target small businesses with unfavourable loan terms and exploit their financial vulnerabilities.
Newer AI technologies can adapt to cybersecurity defenses in real-time, which is very scary, however despite this, cyber resilience among business owners is declining. In 2023, 69% of SME owners reported taking steps to reduce their cyber risks, but by 2024 that number had dropped to 61%.
Other key findings from the survey include:
- Nearly half (45%) of respondents believe their business is vulnerable to a cyberattack or data breach, yet 62% do not consider cybersecurity a financial priority.
- Only 45% of respondents have implemented defenses against cyberattacks, and just 31% increased their cybersecurity measures in the past year.
- Only 18% reported having cyber insurance coverage.
The IBC’s annual Cyber Savvy public education campaign is attempting to support businesses in boosting their cyber resilience. Their free self-assessment tool is designed to help SME owners evaluate their need for cyber insurance. Owners can identify key cybersecurity protocols that insurers look for when assessing risk through answering 10 simple multiple-choice questions.
Cyber insurance for your small business
In today’s digital age, almost every business relies on computers to store critical information such as contacts, project materials, inventory lists, banking details, and invoices. Unfortunately, this type of data is exactly what cybercriminals are after. Given the increasing sophistication of cyber attacks, we strongly recommend investing in cyber insurance.
Also known as CPM insurance — covering “cyber, privacy, and media” — these policies are specifically designed to protect businesses from financial losses caused by cybercrime. The three key areas of protection include:
- Cyber: Safeguards against data breaches and cyberattacks.
- Privacy: Protects your business if sensitive client or customer information is compromised.
- Media: Covers issues related to online content and intellectual property.
If your business is hacked and customer or client data is stolen, cyber liability coverage can help mitigate losses from lawsuits related to privacy breaches.
Additionally, always ensure your files are backed up, whether via the cloud or external devices. This provides an extra layer of security and helps you recover data if a cyberattack occurs.
Additional small business insurance options
In addition to basic business insurance coverages, which include commercial vehicle insurance, property and contents insurance, and commercial liability insurance, small business insurance packages can be tailored to your needs with the following options:
- Life insurance policies ensure financial protection for your family if something happens to you. It pays benefits to the named beneficiaries upon your death and can cover expenses such as funeral costs and any outstanding debts, like a mortgage.
- If you’re injured and unable to work for a specified period, disability insurance provides a source of income during your recovery.
- If your business partner passes away, partnership insurance enables you to legally purchase their shares in the company.
- If diagnosed with a serious illness, critical illness insurance offers a lump sum payment to help with medical expenses or other financial needs.
- Key person insurance protects against the financial impact of losing a vital employee or business partner who plays a significant role in running the company.
- If you offer professional services, consider errors and omissions coverage. It protects you from legal claims due to negligence or mistakes in your work. Some contracts may even require it.
- Business interruption insurance compensates for financial losses if unforeseen events temporarily or permanently disrupt your business operations.
Trust Lane’s for all of your small business insurance needs
The experienced and knowledgeable insurance brokers of Lane’s can help explain all of the ins and outs of your small business insurance coverage. We work for you — not the insurance companies. Contact us at our Calgary, Edmonton, Banff, and Alberta offices today to find out what we can offer you, and ultimately your employees and your company too.
