Insight written by Ben Hobby, Principal, Brian Nichols, Principal, Bernard Regan, Principal and Christopher J. Tait, Principal From Baker Tilly US
Small and mid-sized businesses (SMBs) are the backbone of every economy, yet they remain dangerously exposed to cyber risk. Many SMBs lack the budget, infrastructure and in-house expertise to implement strong defenses, leaving them far more vulnerable to attacks.
Rising premiums and stricter underwriting standards have only made matters worse. Increasingly, SMBs either buy inadequate coverage or forego cyber insurance altogether, leaving them without a safety net if disaster strikes. The collapse of UK-based KNP Logistics serves as a stark warning of what’s at stake.
The challenge for insurers is that traditional underwriting isn’t built for this segment. Evaluating a cyber policy for a SMB requires the same diligence as for a large enterprise, but the premium return is far smaller. As a result, insurers are disincentivized to spend significant time underwriting SMBs, even though they represent one of the largest untapped markets in the industry. That’s where technology — particularly AI-driven underwriting and automation – comes in.
In 2026, expect to see an increased push toward smarter tools that can efficiently assess SMB risk profiles at scale, analyze exposures and tailor coverage levels to match the real risks these businesses face, all without driving premiums out of reach. By leveraging AI alongside automation, insurers can expand coverage to this underserved market, grow the overall premium pool and deliver much needed protection for businesses that form the heart of global economies.
The takeaway: The cyber market can’t continue competing over the same large accounts. To grow sustainably — and to protect SMBs from devastating losses — insurers will need to embrace AI-powered, tech-driven solutions that finally make cyber coverage accessible, affordable and viable for SMB.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought.
