There are growing concerns that cyber insurance could soon become a market differentiator in South Africa, dividing those businesses able to demonstrate strong cyber resilience from those left exposed.
Managed Service Providers (MSPs) are being warned that the local insurance industry is starting to measure IT service providers against specific security baselines and those that fall short may not be able to secure cover for themselves or their customers. This leaves businesses at risk of carrying the full cost of disruption, ransomware payouts, or regulatory fines if they remain uninsured.
For cyber insurance to have a wide-scale impact in the South African channel, it must be treated as more than an optional add-on. Yet, research shows that many SMEs remain slow to adopt cyber insurance despite escalating threats.
A 2025 Arctic Wolf Cyber Insurance Report highlighted that only half of businesses in the UK and Ireland had cover, leaving the other half exposed to the average cost of a breach of around £90,000 (roughly R2.1 million). Similar trends are visible in South Africa, where the cost of ransomware incidents often runs into millions of rand, an amount most SMEs cannot afford to absorb.
Insurance brokers surveyed expected cyber claims to rise significantly in the coming year as cybercriminals refine their tactics. The consensus is clear: cyber insurance is no longer a “nice to have”, but a strategic pillar of modern risk management.
Kevin Kiser, senior director of strategy for insurance alliances at Arctic Wolf, explained:
“As threat tactics evolve, cyber insurance is no longer a ‘nice to have’ but a strategic pillar of modern risk management.”
The South African insurance sector has echoed these concerns, pointing to the rise of artificial intelligence (AI)-driven attacks, phishing, and ransomware as critical risks for SMEs. For many brokers, partnering with MSPs and security providers is becoming essential to establish risk management baselines before issuing policies.
Arctic Wolf’s findings also showed that 18% of respondents had seen clients hit with attacks in the past year, with the average claim at £87,000 (around R2 million) but costs for larger organisations often skyrocketed beyond R10 million.
South African insurers are increasingly requiring evidence of robust cyber hygiene, including endpoint protection, backups, incident response planning, and compliance with POPIA, before approving cover. Failure to demonstrate this can lead to rejected claims or policy exclusions.
Compliance professionals have warned that cyber insurance must not be seen as a tick-box exercise. Ritchie Puckey, head of compliance at Espria, noted:
“This dangerous assumption is leaving small businesses seriously unprepared. Cyber insurance is the new compliance. SMEs need to be ready to demonstrate exactly how they are managing cyber risk in the modern security landscape.”
With South African SMEs already under pressure from load shedding, rising costs, and regulatory compliance, the additional burden of cyber resilience may feel overwhelming. But the reality is that without insurance and the security controls that underpin it, businesses risk financial ruin after a major cyber incident.
