AI is being used to cheat small business owners, says nationwide survey

Just when employees have learned to ignore misleading texts and emails from the boss, along comes the next generation of impersonation using artificial intelligence.

Cybercriminals are increasingly using generative AI, including voice and video calls, to defraud businesses. And small businesses are even more vulnerable.

A new survey from Nationwide has found that a quarter of small business owners have been targeted by AI-based scams in the past year, including voice or video impersonations of senior employees via email.

“As the generation of artificial intelligence continues to transform various industries, its misuse in scams is a significant challenge for small businesses with fewer resources for cyber defense than larger corporations, making them easier targets for cybercriminals” , said Nathan Lentz, vice president of small business sales and nationwide distribution.

Do these scams work? Well, 52% of owners admit to being personally scammed by deepfake images or videos in the past year.

While 90% of those surveyed want more support to protect against increasingly sophisticated attacks, only 42% of small business owners (SBOs) report having cyber insurance, perhaps because those tasked with protecting their businesses small IT attacks underestimate the cost and time required to recover from a breach. While 65 percent believe recovery costs would be $5,000 or less, the average cyber claim for a small business can cost between $18,000 and $21,000, Nationwide said.

While 20% of business owners believe they will recover in less than a month, it usually takes 75 days – over two months. Business owners may also misunderstand insurance coverages, with 66% believing that non-cyber insurance would cover losses from an attack. The same percentage of SBOs are confident in their business’s ability to recover from an attack.

“While small business owners feel prepared to prevent a cyber attack, they need to ensure their preparedness is backed up by comprehensive cyber insurance to truly protect their operations,” said Lentz. “Without it, they face potentially devastating consequences to their finances, operations and customer relationships.”

A growing number of business owners are concerned about a potential cyber attack — 69% in the latest survey, up 16 points from 2022 and up 31 points from June 2020.

With increased awareness, two-thirds of SBOs feel prepared to prevent such an attack, and 71% provide formal cybersecurity training to employees at least once a year, a 15-point increase from 2022. In time while 69 percent reported having an incident response plan in place, 28 percent admitted their plan was outdated, Nationwide said.

Agents can play a critical role in educating customers about proactive steps they can take to protect their business from cyber attacks, including improving digital infrastructure and reviewing cyber coverages, Lentz said.

“Our research shows that three-quarters of agents (73%) say their business customers are considering or purchasing cyber insurance because they have either been the victim of an attack or witnessed a similar business being victimized,” he said . “As cyber threats continue to evolve, agencies should encourage business owners to take proactive steps to protect their businesses. Investing in the right insurance policies can not only mitigate the risks posed by cyber attacks, but also ensure that recovery, when needed, is faster, less expensive and more effective.”

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Trends InsurTech Commercial Lines Business Insurance Data Driven Artificial Intelligence