How to sell reluctant clients on cyber coverage

How to sell reluctant clients on cyber coverage | Insurance Business Canada

Commercial Solutions

How to sell reluctant clients on cyber coverage

Proper insurance could save SMEs millions

Commercial Solutions

By
Nicole Panteloucos

In the wake of this summer’s CrowdStrike outage, recent reports indicate that hackers have been exploiting the situation by conducting scams to steal sensitive data and deploy malware.

With small businesses accounting for 43% of cyberattacks annually, and estimates predicting that 46% of all cyber breaches impact businesses with fewer than 1,000 employees, the chaos following CrowdStrike underscores the urgent need for SMEs to reassess their risk exposure.

The problem? It’s not uncommon for brokers to encounter clients who think they don’t need cybersecurity, citing misconceptions like their business being too small, assuming it’s just unnecessary, or believing its too expensive.

Invest now, save in the long run

However, according to Jason Hart (pictured left), head of proactive cyber at CFC, partnering with a reputable cyber insurance provider can actually save SMEs money in the long run.

A recent study by CFC found that if an SME were to outsource various costs related to cybersecurity solutions, it would amount to an annual spend of $76,967. In contrast, estimates show the cost of a cyber insurance policy for an SME through an insurer can be as little as $1,740 annually.

This stark cost difference could be the key information brokers need to break through to SME clients who repeatedly dismiss the coverage.

“People don’t often consider the operational costs of analyzing security data and making informed business decisions,” said Hart, emphasizing that this specialized expertise is a key advantage of partnering with a trusted cyber insurer – an important point for brokers to highlight in client discussions.

He added, “When you work with an insurer, you also avoid the hassle of deciding which vendor to go with and how to implement your cyber protection technology.”

Leverage expert insights

It’s also crucial for brokers to convey to clients that working with a cyber insurance provider is not just about convenience, but also about leveraging valuable data. 

Insurers leverage a broad history of claims data to help predict when and how cyber breaches might occur – implementing best practices to mitigate client risks. 

“We instantly understand the attack landscape. We can determine all the potential entry points that put your business at exposure, and we can map that attack surface immediately,” confirmed Hart. “If you were to ask an SME, ‘could you give me your IP addresses? Could you give us your DNS sub names?’ – it’s like a different language, they wouldn’t understand that.”

Since many SMEs lack the risk tolerance and liquidity of larger businesses, a single cyber incident could risk wiping out an entire small business. With the average impact of a data breach on organizations with fewer than 500 employees costing roughly $3 million, the savings associated with working with an expert cyber insurer should not be overlooked.

Hart concluded: “SMEs represent a significant portion of businesses across sectors like healthcare, financial services, retail, and legal. A ransomware attack on any of these organizations can have massive downstream effects. In today’s world, data is the new oil.”

For brokers aiming to better sell SMEs on cyber insurance policies, Lindsey Nelson (pictured right), head of cyber development at CFC, offers several additional tips:

Lead with cyber: “Rather than leaving the topic of cyber to the last five minutes of a renewal meeting, start client conversations with cyber coverage. It’s often a client’s largest exposure, and introducing it early makes the discussion more effective.”
Focus on the basics: “Explain what cyber insurance is before you start comparing policies. We see many brokers going in with wording comparisons, which not only fail to address what the bulk of a cyber policy is – but force the client to decide between two or three products before they’ve even understood why they need cyber cover in the first place.”
Know your products: “As insurance professionals, there’s no requirement for us to be security experts but we do need to be able to articulate at a high level where a client’s exposure lies and that a solution exists for that.”

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