Six tips for selling Cyber Insurance
Even though threat actors increasingly target small businesses, most business owners don’t recognize the risks of cyber attacks — or consider their business a target. In this relatively new market for cyber insurance, the selling process typically requires a significant amount of client education. This includes explaining not only the risk and consequences of cyber crime, but the fundamentals of cyber coverage.
With cyber policies offering innovative features such as active monitoring, clients need help to understand how policies work, what’s covered, and the value of this protection. How can you best convey this information? Here are six tips to help you successfully share the importance of cyber coverage so your clients can protect themselves against growing threats.
Go for clarity
With the technological backdrop of cyber crime, it can be tempting to veer into details and jargon. Yet business owners want to understand the basics: What are the issues? How might this affect my business? Why should I take action? Communicate in clear, simple terms. Avoid technical descriptions and unnecessary detail.
Use everyday language to explain the risks and potential impacts of cyber crime on customers’ operations and bottom lines. Provide an overview of common cyber attacks. The frequency and impact of attacks, not the mechanisms and minutia, is of primary concern.
Paint the risks
Clients should understand how the variety and prevalence of cyber risks means potentially greater risk for their business. Many small business owners think they’re not at risk because of their size, when in fact threat actors increasingly target small businesses using automated attacks. And many business leaders aren’t aware that nearly half of small business attacks originate with human error. Or that ransomware attacks often involve significant extortion losses. Or that cyber breaches compromising personal identifiable information (PII) can lead to privacy violations and lawsuits.
Business owners want to make sound financial decisions. Illustrate the typical costs of cyber attacks related to stolen funds, lost business income, extortion, and equipment replacement — as well as the response costs such as technical, legal, and public relations expenses.
Show how a cyber policy covers these costs, and helps companies quickly restore operations and protect their reputations. The cumulative costs of a cyber attack can be devastating for a small business. Cyber coverage is essential to protecting company value.
Explain the coverages
Cyber policies offer a broad scope of coverage, from network liability to business interruption. Using basic terms, help your client understand what these various coverages mean. Explain when they might come into effect and offer examples of what they provide. Point out the distinction between first-party and third-party claims, to underscore that cyber insurance can cover customer losses as well as business losses.
Highlight supplemental benefits
Cyber policies can offer benefits beyond traditional coverage. For example, active monitoring and risk assessment provides ongoing protection to identify risks and prevent issues from becoming problems. These supplemental benefits can include in-house incident response teams and claims professionals so policyholders can recover faster with minimal business impacts.
Bolster the case with statistics
Real-world figures support the case for prioritizing cyber coverage. For many small businesses, even an average cyber attack can cause financial, operational, and reputational costs that are difficult to overcome. According to Coalition's 2022 Claims Report Mid-year Update, ransomware and funds transfer fraud (FTF) incidents continue to increase, as do the costs to organizations. Recent costs associated with common cyber threats include:
Average claim for a small businesses – $139,000
Average ransomware demand – $1 million
Average cost to remediate a ransomware claim increased to more than $300,000
Average loss for phishing attacks – $100,000
Average cost of funds transfer fraud – $200,000
Build a successful Cyber Insurance sales strategy
The cyber market is one of the fastest growing insurance sectors. Yet most small businesses are unfamiliar with cyber coverage, don’t realize their own cyber risk, and underestimate the cumulative consequences. Though the risk of cyber crime is high and increasing, a robust cyber insurance policy can help minimize it. With preparation, clear communication, and good strategy, you can educate clients about cyber risks, and become a trusted resource for protecting their business.
Coalition’s products are offered with the financial security of Allianz Group* (A.M. Best A+ rating), Arch Specialty Insurance Company (A.M. Best A+ rating), Ascot Group** (A.M Best A rating), Fortegra Group (A.M. Best A- rating), Lloyd’s of London (A.M. Best A rating), Swiss Re Corporate Solutions*** legal entities (A.M. Best A+ rating), Vantage Risk Specialty Insurance Company (A.M. Best A- rating), and Chaucer Insurance Company DAC (A.M. Best A rating).
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* Insurance products are offered in the U.S. by Coalition Insurance Solutions Inc., a licensed insurance producer and surplus lines broker. Insurance products may not be available in all states, For further details see here. ** Insurance products may be underwritten by Ascot Specialty Insurance Company, Ascot Insurance Company, or an affiliated company, which are members of Ascot Group. *** Insurance products may be underwritten by North American Capacity Insurance Company, Swiss Re Corporate Solutions America Insurance Corporation, or an affiliated company, which are members of Swiss Re Corporate Solutions. Fortegra® is the marketing name for the service contract and insurance operations of the subsidiaries of The Fortegra Group, Inc.