Offering Cyber Coverage Protects Both You and Your Clients. Here’s Why.

Offering Cyber Coverage Protects Both You and Your Clients_ Here's Why (Image)

Getting comfortable with selling cyber is not only good for business, but also protects your agency from potential E&O exposure. 

When we talk about the need for cyber insurance, there are two things that both independent agents and their clients should know: Cybercrime in 2022 is a multibillion-dollar business, and 43% of all cyber attacks are directed at small businesses.

Another staggering statistic: IBM found in a study last year that 60% of businesses with fewer than 500 employees go out of business within six months of a cyber attack.

Now that we have your attention, it’s time to make a practice of communicating that same sense of urgency to your customers while taking steps to strengthen your agency’s cybersecurity defenses.

There are a variety of reasons why agents often don’t make a point of selling cyber coverage to their clients.

For one thing, many agencies lack the resources to even cross-sell auto and homeowners, much less cyber. Others will tell you that if they’re going to reach out to an existing policyholder, it would likely be at renewal time – simply because they often don’t have the bandwidth to do so otherwise.

Perhaps the biggest reason more agents don’t actively push cyber, though, is this: They don’t fully comprehend the scope of the exposures, and they’re not well versed in the finer points of the coverage or the tightening underwriting requirements.

To be fair, this isn’t an easy task. Cyber risks are continuously evolving, and the protections (as well as the policy limits) available will vary from carrier to carrier. However, when it comes to cyber insurance, not having the knowledge base to educate your clients on their exposures can put their business – as well as your ownership of those accounts – at risk.

Debunking the Myth

It’s terribly ironic that the commercial clients at greatest risk of loss from a cyber breach – small to midsized businesses – are the ones who are convinced it will never happen to them. This is an argument heard by many agents who attempt to sell cyber to their existing clients.

Michael Sabbagh Jr., Renaissance Alliance’s Director, Commercial Lines Marketing & Placement Strategies, draws a strong parallel between cyber coverage and Employment Practices Liability (EPLI). Once upon a time, he says, “no employer thought any of their employees would ever sue them. They would always say, ‘It’s not going to happen to me.’ Well, we saw how that changed, and now EPLI is essentially a standard buy. It’s very much the same with cyber.”

Other prospects will assert that cyber cover is too expensive for them – and they’d be wrong.

“Cyber rates are rising, there’s no question about that,” says Tom Wetzel, an agency consultant on cybersecurity. “There are two persistent myths, however, about how to deal with it. One is that there is little an agent can do beyond shopping carriers. Insurers want policyholders to do more to thwart cybercrime and agents can guide them to in that process. Second, deploying strong cybersecurity defenses are affordable, even for the smallest clients.”

Wetzel, whose firm Thomas H. Wetzel & Associates is partnering with PIA National to offer its exclusive cyber risk assessment to independent insurance agents, agreed that agents often neglect to offer cyber to their clients because agents understandably like to lead with their strengths – and cyber isn’t always one of them.

“Agents don’t fully understand how complicated cyber can be, and they can be intimidated by it. I’ve had agents tell me, ‘I bring it up only if they ask,’” he says. “Cyber should always be top of mind for every agent, even if they don’t sell a lot of it. It should be in their arsenal.”

The problem is, if you don’t offer your client cyber coverage and their business suffers a costly breach, you might be looking at a lawsuit. The E&O risks must be considered.

“Independent agents must not only understand cyber coverages but also how to help clients fight cybercrime in order to effectively sell it,” adds Wetzel, “because then they can sell the urgency in obtaining it – and what a policyholder needs to qualify for it.”

Getting comfortable with selling cyber starts with having the right knowledge base, and it’s a wise investment in your own professional development as an independent agent. Agents can start with their appointed carriers to take advantage of training classes offered, or inquire with their state-based or other associations to learn what education resources are available.

Wholesalers also offer training courses in cyber, and there are a variety of independent seminars in which agents can enroll to gain the expertise they need. Wetzel also offers cybersecurity courses with CE credit.

For those who question whether the time and effort required to develop such specialization is worth it, Wetzel has one thing to say: “The number of cyber attacks and their rate of success grows every year. Cybersecurity is now a core business-survival challenge, not just an ‘IT’ issue for all businesses, regardless of size. Every business and every consumer depends on a digital ecosystem in which the cybersecurity weaknesses of one business can spill over to others.”

In Part Two of this column, we’ll explore how to effectively pitch cyber products to your client, every single time.

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