If you’re running a business in 2026, cyber insurance probably isn’t something you think about every day. And honestly, that’s understandable. Between managing your team, growing your company, and keeping everything running smoothly, insurance policies aren’t exactly top of the excitement list.
But here’s the thing: cyber insurance is quietly becoming one of the most important protections your business needs. Not because we want to alarm you, but because the digital landscape has changed dramatically, and the risks have come along for the ride.
Let’s break down what’s happening in the UK cyber insurance market right now, what’s shifting in 2026, and what it all means for businesses like yours.
Where we are right now: The current state of cyber insurance
Most UK businesses still aren’t covered
Here’s a surprising stat: only about 40% of UK small and medium-sized businesses currently have cyber insurance. That means six out of ten companies are operating without cover, even though cyber attacks are becoming more frequent and more sophisticated.
This isn’t because business owners don’t care about security. It’s often because cyber insurance feels complex, confusing, or like something that only happens to other people. The truth is, cyber incidents are affecting businesses of all sizes, and the gap between risk and protection is wider than it should be.
Pricing has been relatively stable
One bit of good news: the market is currently in what insurers call a “soft pricing environment”. In plain English, that means premiums aren’t skyrocketing. In fact, rates in some sectors have actually fallen year-on-year, even with high-profile cyber incidents making headlines.
This stability exists because there’s healthy competition in the market and plenty of capacity from insurers. It’s actually a good time to explore cover if you’ve been putting it off.
But claims are still high
Whilst pricing has remained steady, UK cyber claims in 2024 were roughly one-third higher than they were between 2020 and 2022. Ransomware attacks, data breaches, and system outages continue to disrupt businesses across every industry.
The threat isn’t going away. If anything, it’s becoming part of the normal landscape of running a modern business.
What’s changing through 2026 and beyond
More businesses are getting covered
The cyber insurance market is expected to grow significantly through 2026 and beyond. This growth is being driven by two main factors: businesses becoming more aware of cyber risks, and regulatory requirements that make protection more necessary.
Brokers are reporting that cyber insurance is their top-growth commercial product for 2026, which tells you something important: businesses are starting to take this seriously. In fact, over half of UK commercial brokers (53.6%) believe cyber insurance has the most growth potential among new or emerging commercial insurance products.
Your cybersecurity investment matters more than ever
Around 66% of firms globally are planning to increase their cybersecurity budgets in 2026, with UK organisations leading this trend at 85%. This isn’t just about spending money on fancy security tools. It’s about demonstrating to insurers that you’re actively managing your risk.
Here’s where it gets interesting: better cybersecurity controls are increasingly becoming pre-conditions for getting cover in the first place. But there’s a positive side to this. If you invest in strong security measures, you can often reduce your premiums. Insurers are moving away from simple questionnaires and towards measurable risk assessments.
Think of it this way: it’s like home insurance. If you install a burglar alarm and secure locks, you get better rates. The same logic applies here.
How Cyber Essentials can get you free cyber insurance
Here’s something that might genuinely surprise you: you can get free cyber insurance just by achieving a government-backed certification called Cyber Essentials. Yes, actually free.
What is Cyber Essentials?
Cyber Essentials is a UK government-backed certification scheme designed to help businesses protect themselves against common cyber threats. It’s not some complicated, enterprise-level security framework. It’s a practical, achievable standard that focuses on five key security controls:
- Firewalls and internet gateways
- Secure configuration
- User access control
- Malware protection
- Patch management
Research shows that Cyber Essentials protects against approximately 80% of common cyber attacks. That’s a significant level of protection from a relatively straightforward certification process.
The free insurance offer
When UK-domiciled organisations with a turnover under £20m achieve Cyber Essentials certification covering their whole organisation, they’re automatically entitled to free cyber liability insurance. The cover is underwritten by AIG and administered via Sutcliffe & Co Insurance Brokers.
Here’s what the free policy includes, up to £25,000 limit of indemnity:
- Liability cover: Claims made against you arising from digital media activities and security and privacy wrongful acts
- Event management costs: Legal expenses, IT expenses, data recovery, reputation protection, notification expenses, credit monitoring, and first response expenses following a data breach
- Extortion demands: Coverage for ransoms and other cyber extortion
- Regulatory investigations: Defence costs and regulatory fines (where insurable by law)
- 24-hour helpline: Immediate crisis management and incident response support
Who’s eligible?
To qualify for the free cyber insurance, you need to meet these criteria:
- Your entire organisation must be Cyber Essentials certified (not just part of it)
- Your organisation must be UK-domiciled or in Crown Dependencies
- Your annual turnover must be under £20 million
- You need to opt in when completing your certification
If you already have cyber insurance in place, you can opt out of the free cover, there’s no change to the certification cost either way.
Beyond the free cover: Premium discounts
Even if your turnover exceeds £20 million and you’re not eligible for the free insurance, Cyber Essentials certification can still reduce your cyber insurance premiums. Here’s why insurers value it:
Insurer data shows that companies with Cyber Essentials controls in place made 80% fewer claims than those without certification. That’s a dramatic reduction in risk, which insurers recognise through better rates and terms.
The certification demonstrates to insurers that you’re actively managing your cyber risk with measurable, verified controls. It’s not just talk, it’s independently assessed proof that you’ve implemented fundamental security protections.
Upgrading your cover
The £25,000 limit that comes with Cyber Essentials might be sufficient for a small incident, but if you’re concerned about more serious problems or multiple incidents, you can upgrade your cover through Sutcliffe & Co.
Options include increasing your limit of indemnity to £100,000 or £250,000 for an additional annual premium. These upgraded rates are often still more competitive than standard market rates because you’ve already demonstrated your security posture through certification.
Is Cyber Essentials worth it?
Let’s be practical about this. The certification itself typically costs from around £300 to £500 for the basic level, depending on your certification body. For that investment, you’re getting:
- £25,000 of free cyber insurance (worth several hundred pounds annually)
- Protection against 80% of common cyber attacks
- A certification that’s often required for government contracts
- Enhanced credibility with clients and partners
- Potential premium reductions on higher-level insurance policies
- A solid foundation for your cybersecurity practices
For most SMEs, it’s genuinely good value. You’re not just ticking a box, you’re implementing practical security measures that reduce your actual risk whilst unlocking free or reduced insurance cover.
How ERGOS can help
If Cyber Essentials sounds like something your business should consider, we can help you through the entire process. We’ll assess your current setup, guide you through implementing the five key controls, and support you through the certification process.
Get in touch with our team to discuss whether Cyber Essentials is right for your business and how we can help you achieve certification whilst strengthening your overall security posture.
Insurance is becoming more than just a payout
The cyber insurance market is evolving from a traditional “something goes wrong, we pay out” model to something more proactive. Some insurers are now embedding continuous risk assessment, real-time monitoring, and resilience tools directly into their policies.
What this means for you is that your insurer isn’t just there for the worst-case scenario. They’re becoming a partner in helping you prevent incidents from happening in the first place. It’s a smarter approach that benefits everyone, much like how managed IT services work to prevent problems before they occur.
The trends shaping the future of cyber insurance
Smarter underwriting with better data
Insurers are getting much better at understanding cyber risk. They’re using advanced modelling, threat intelligence, and even AI to estimate exposures more accurately. This means they can price policies more fairly and identify risks more precisely.
For business owners, this is actually good news. It means you’re less likely to be paying for someone else’s poor security practices, and more likely to be rewarded for your own good ones.
Your supply chain matters too
One emerging area that’s getting significant attention is third-party and supply chain risk. Modern businesses rely on cloud services, software providers, and digital ecosystems. An attack on your supplier can become your problem very quickly.
Insurance leaders are emphasising this as a critical exposure area, which means you’ll increasingly need to think about the security of everyone you work with, not just your own systems. This is where having comprehensive IT support that monitors your entire technology ecosystem becomes invaluable.
AI is changing the game on both sides
Artificial intelligence is playing an increasing role in both cyber attacks and cyber defence. This brings new complexities into how policies are written and what they cover. It’s a rapidly evolving area, and insurers are working to keep pace with these changes.
The National Cyber Security Centre regularly publishes guidance on emerging threats, including AI-driven attacks, which can help businesses stay informed.
The regulatory landscape is shifting
Whilst it’s not law yet, there’s industry discussion in early 2026 about potentially making cyber insurance mandatory for commercial entities. Even without that, existing regulations like GDPR already encourage businesses to have cyber policies as part of managing compliance costs.
If you’re unsure about your compliance obligations, our team can help you understand what your business needs to stay protected and compliant.
Common FAQs about cyber insurance
Will cyber insurance get more expensive in 2026?
It’s a mixed picture. Premiums are soft in some sectors right now, but pricing is expected to “harden” selectively, particularly in industries with higher claims or systemic risk. Additionally, as insurers require stronger cybersecurity measures as a prerequisite for cover, the overall cost of getting insured (including the security investments) may effectively increase.
The key takeaway: it’s probably not getting dramatically cheaper, and waiting might not save you money.
Do small businesses really need cyber insurance?
Yes, genuinely. Only about 40% of SMEs currently have cover, yet a significant proportion experience cyber incidents. You don’t need to be a large corporation to be targeted. In fact, smaller businesses are often seen as easier targets because they typically have fewer security resources.
The market momentum suggests that SMEs will be a major driver of growth through 2026, which reflects a growing recognition that size doesn’t protect you from cyber threats.
How does investing in cybersecurity affect insurance?
Investing in security controls can improve your ability to get insured in the first place, strengthen your overall risk profile, and potentially lower your premiums. Insurers are increasingly focused on measurable security posture rather than just ticking boxes on a form.
Think of cybersecurity investment not just as a cost, but as something that can genuinely reduce your insurance expenses whilst also protecting your business. Our cybersecurity services are designed to strengthen your security posture in ways that insurers recognise and value.
Should I get Cyber Essentials certification?
If your business has a turnover under £20 million and you’re UK-based, it’s worth serious consideration. You’ll get free cyber insurance worth several hundred pounds annually, plus you’re implementing security controls that demonstrably reduce your risk. Many insurers also recognise the certification when pricing larger policies, so it can save you money in multiple ways.
What you should do now
If you’re feeling a bit overwhelmed by all this, that’s completely normal. Cyber insurance and cybersecurity can feel like complex, technical topics that sit outside your expertise. But the good news is that you don’t need to become an IT expert to take sensible steps.
Here’s what we’d recommend:
Assess your current cyber risk posture. This doesn’t need to be complicated. Start with understanding what systems you rely on, what data you hold, and where your vulnerabilities might be. If you’re working with an IT provider, they should be able to help you with this. Get in touch with our team if you’d like support conducting a comprehensive assessment.
Consider Cyber Essentials certification. If you’re eligible (UK-based with turnover under £20m), this is one of the most cost-effective ways to improve your security and get free insurance. We can guide you through the entire certification process.
Work with a broker who understands your business. A good broker can help you position risk mitigation alongside insurance strategies. They should be able to explain things clearly without drowning you in jargon.
Plan for the trends coming in 2026. Think about your supply chain risks, any AI-related exposures, and keep an eye on regulatory developments that might affect your sector. The British Insurance Brokers’ Association offers helpful resources on cyber insurance for UK businesses.
Don’t put this off. The market conditions are currently quite favourable, and getting covered now means you’re protected whilst you work on strengthening your security posture.
The bottom line
Cyber insurance in the UK isn’t static. It’s evolving rapidly, becoming more integrated with actual cyber resilience rather than just being a financial safety net. The market is growing, products are getting smarter, and the gap between insured and uninsured businesses is likely to narrow over the coming years.
For SMEs in particular, 2026 represents an important moment. The market is accessible, insurers are keen to write policies, and the support ecosystem around cyber insurance is improving.
You don’t need to fear this topic or feel like you’re behind. What you need is a clear understanding of where you stand, sensible advice from people who won’t bamboozle you with technical speak, and a plan that makes sense for your business.
We’re here to help you navigate this. Not because we want to sell you something, but because we genuinely understand that managing IT and its associated risks is challenging when it’s not your area of expertise. And that’s perfectly fine. That’s what we’re here for.
If you’d like to learn more about how to protect your business in 2026 and beyond, explore our services or read more insights on our blogs.
Sources and further reading
- GlobalData 2025 UK SME Insurance Survey
- Marsh UK Cyber Insurance Claims Trend Report 2024
- GlobalData 2025 UK Commercial Insurance Broker Survey
- Marsh Cyber Catalyst Report: Guiding Priorities in Cyber Investments
- PwC 2026 Global Digital Trust Insights Survey
- IASME Consortium – Cyber Essentials Liability Insurance
- UK National Cyber Security Centre – Cyber Essentials
- Sutcliffe & Co – Insurance with Cyber Essentials Certification
- UK National Cyber Security Centre
- Information Commissioner’s Office – GDPR Guidance
- British Insurance Brokers’ Association
About ERGOS
ERGOS provides expert IT support and cybersecurity services to businesses across the UK. We simplify everyday IT complexity in a friendly and approachable way, helping you protect and grow your business. Learn more about how we can help.