Should Singapore SMEs invest in cyber insurance

The Cyber Security Agency of Singapore reported that 40% of cyberattacks in Singapore target SMEs. Yet, awareness about cyber threats among SMEs is moving in the opposite direction. Only 40% of SMEs in Singapore consider themselves fully informed of cyber risks, down from 47% in 2024.

Now that it's 2026 and cyber threats are rising in Singapore, SMEs are getting increasingly exposed to cyber threats due to phishing scams, data breaches, ransomware, AI-powered attacks, and vulnerabilities in cloud and remote-work systems.

This leads us to an unavoidable question: should Singapore SMEs invest in cyber insurance in 2026, and is it worth the cost?

This guide performs a complete breakdown of cyber coverage for Singapore businesses, why cyber coverage is becoming essential, the hurdles without it, and much more. So, let's jump right to it!

Why SMEs in Singapore Need Cyber Protection

Cyber risk for Singapore organizations climbed sharply in 2024, and that rise matters a lot for SMEs. The number of systems infected by malware in 2024 increased by 67% compared to 2023, while reported ransomware cases rose by 21%, with phishing also surging.

Cyber trends indicate that attackers are expanding their reach and diversifying their tactics. Why this matters for SMEs:

• Higher chances of operational disruption, including system downtime, lost access to files, recovery costs, etc.
• SMEs are attractive and vulnerable targets because they are more involved in using unpatched and outdated software.
• Financial losses extend beyond ransom payment, including costs for incident response, forensic investigations, regulatory notifications, legal fees, lost revenue, and customer remediation.
• A cybersecurity incident at an SME can jeopardise contracts with banks, government agencies, or multinational customers that require security certifications or incident reporting.

The Financial Impact Without Cyber Insurance

Cyber incidents are devastating for SMEs, but let's also look at what financial impacts they have to bear without cyber insurance:

1.      Large Cost of Data Breaches

In the ASEAN region (which includes Singapore), the average cost of a data breach jumped to S$4.34 million (≈US$3.33 million) in 2024, which is a 7% increase from the previous year.

For Singapore specifically, one source estimates the average cost per cybersecurity attack at around S$1.7 million (≈US$1.3 million). While these figures may reflect mid-to-large organizations rather than very small SMEs, they illustrate the scale of risk in this market.

1. 2.      SMEs are Less Immune and Prepared

A survey of Singapore SMEs found that more than half of those attacked experienced losses of S$500,000 or more (with some reporting losses of S$1 million or more) after malware, phishing, or other cyber incidents.

Another study showed nearly 20% of local organizations faced more than 25 cyberattacks in a year (i.e., more than one attack every two weeks), and of those:

• 38% reported reputational harm;
• 37% incurred higher security costs;
• 33% required senior leadership changes.

These metrics highlight the frequency of incidents and the costs incurred by time, response, and recovery. However, businesses can reduce the impact of these issues with cyber insurance.

What Cyber Insurance Covers

Cyber insurance is a financial safety net that helps businesses recover from cyberattacks, data breaches, or digital system failures. It covers the costs associated with responding to and recovering from cyber incidents, which helps SMEs reduce financial losses and business disruption.

Key coverage areas of cyber insurance include:

• Incident Response & Forensics

○       Investigation to identify the breach source and impact

○       IT forensic services to contain and remediate threats

• Data Breach Costs

○       Customer notification expenses

○       Credit monitoring and identity-theft assistance for affected parties

• Business Interruption

○       Compensation for lost revenue due to system outage or downtime

○       Temporary operational cost support

• Ransomware & Cyber Extortion

○       Ransom payment assistance (where legal)

○       Negotiation and crisis management support

• Legal & Regulatory Support

○       Legal advice and representation

○       Coverage for penalties/fines (where insurable under local laws)

• Cybercrime & Fraud Losses

○       Losses due to phishing, social engineering, and fund-transfer fraud (varies by policy)

• Data Restoration & System Recovery

○       Costs to restore corrupted or lost data

○       Repair or replacement of compromised systems

Simply put, cyber insurance ensures that SMEs aren't left alone when a cyber incident hits. It absorbs the legal, operational, and financial burden for faster recovery and business continuity.

What Cyber Insurance Doesn't Cover (Exclusions)

Cyber insurance is meant to offer broad protection, but it does not cover every type of digital risk or business loss. Insurers apply exclusions for different types of cases. The common exclusions include:

• Unpatched or outdated systems
• Pre-existing security issues
• Internal fraud or employee misconduct
• Contractual damages (failing to meet SLAs or business agreements)
• Reputational loss unlinked to financial harm
• Unapproved ransom payments
• Hardware replacement
• Terrorism or state-sponsored attacks (varies by insurer)

All these exclusions mean that SMEs need strong cybersecurity practices and incident-response readiness for full protection and to avoid claim disputes.

Cost of Cyber Insurance in Singapore for SMEs in 2026

The cost of cyber insurance for SMEs in Singapore varies based on business size, data protection volumes, industry risk, and chosen coverage limits. For example, one SME-oriented product offered by Sompo Insurance Singapore starts from S$1,012.50 for basic liability limits (e.g., S$250,000 cover) for SMEs.

According to a broker summary by Corporate Cover, premiums for basic SME cyber policies in Singapore start from as low as S$500 to S$2,000+ per year for coverage in the S$250,000–S$500,000 range.

How Insurers Assess IT Readiness

Before SMEs get cyber insurance, there is a proper evaluation round to evaluate the SME's cybersecurity posture and understand risk exposure and the likelihood of claims. This cyber underwriting process has become stricter as cyberattacks rise.

The main areas that insurers assess include:

• Security Controls

○       Updated firewalls, antivirus, and endpoint protection

○       Email security and phishing-filtering systems

○       Multi-Factor Authentication (MFA) across critical systems

• Patch & Vulnerability Management

○       Frequency of software updates and OS patching

○       Ability to detect and remediate vulnerabilities quickly

• Backup & Recovery Systems

○       Regular, encrypted data backups

○       Offline or immutable backup copies

○       Documented disaster-recovery procedures

• User Access & Identity Management

○       Privileged-access controls

○       Enforcement of strong password policies

○       Identity and access management tools (IAM)

• Employee Cyber Awareness

○       Regular training and simulated phishing tests

○       Policies for device security and safe data handling

• Incident Response & Governance

○       Documented incident response plan

○       Clear roles, responsibilities, and escalation pathways

○       Cybersecurity policy compliance and audit trails

Evaluating the Need for Cyber Coverage

Deciding whether to invest in cyber insurance comes down to balancing risk/exposure and financial resilience. Since malware, infections, ransomware, and phishing aren't slowing down, having a backup to tackle cyber incidents is becoming essential.

Ask these questions to evaluate the need:

Do we store or process customer or financial data?

If yes, breach liabilities and notification costs can be high.

How long could we survive downtime without revenue?

Ransomware and system outages can halt operations for days or weeks.

Do we work with government, banks, or enterprise clients?

Many larger partners now require security controls and insurance.

Do we have the internal capability to manage a cyber incident?

Forensics, legal guidance, breach notifications, and PR support can overwhelm SME resources.

Can we financially absorb a six-figure cyber loss?

Even modest incidents can lead to investigation costs, business interruption, and reputational damage.

Simply put, cyber insurance provides critical financial and operational resilience for most SMEs.

Conclusion

SMEs form a major part of Singapore's economy (employing ~70% of the labour force, accounting for ~45% of GDP). Yet many operate with thin financial buffers, which means a single cyber incident costing hundreds of thousands could threaten survival or force painful scale-backs.

As cyber risks grow more frequent and complex, investing in strong cybersecurity and cyber insurance is a practical safeguard for continuity, trust, risk management, and long-term resilience. Therefore, evaluate your cyber coverage needs, explore available options, and pick the best cyber insurance that best aligns with your needs.