You don't need to be a technology expert to protect your clients from cyber risks. You just need to understand the risks and the mitigation strategies available.
Cyber risks are impacting everyone. The ongoing COVID-19 pandemic has transformed the way we work and live and, in the process, dramatically increased our collective reliance on information technology. Most organizations can no longer function without working computers and continual access to the internet. Digital assets such as customer information and intellectual property are now of more or equal value to physical, brick-and-mortar assets.
Historically, small and midsize businesses were thought to be off cybercriminals' radar, but that is not the case. While cyber incidents can be equally devastating to businesses of any size, we've seen a material uptick in claims targeting small and midsize businesses. The frequency of claims for organizations with 250 employees or less increased by 57% from the first half of 2020 to 2021, according to Coalition's H1 2021 Cyber Insurance Claims Report.
Independent insurance agents need to demonstrate leadership in cyber to guide their clients through the greatest risks facing businesses today. Cyber is now essential coverage for large companies and should also be a priority for small businesses. Additionally, cyber insurance coverage is increasingly required of small companies and vendors to secure business contracts.
You don't need to be a technology expert to protect your clients from cyber risks. You just need to understand the risks and the mitigation strategies available. Here are four tips for agents to show leadership in cyber:
1) Know the risks. Cybercriminals are opportunistic, particularly when it comes to small businesses. Organizations' technology and processes are far more indicative of their risk than their size or industry. No company is too small to be an enticing financial opportunity for attackers. Help your clients understand their specific risks.
2) Leverage data. Partner with an expert and provide a free company-specific cyber profile and security analysis. This is a revealing presentation of what exposures clients face and how to enhance cyber hygiene.
Cybercriminals pick their targets by technology use rather than industry type. However, some industries have experienced notable increases in claims last year. From the first quarter of 2020 to the first quarter of 2021, claims frequency for nonprofits, IT and professional services increased 30%, 46% and 53%, respectively. Industrial goods businesses experienced a notable cybercrime surge, with industrial manufacturing increasing 263% and materials manufacturing increasing 99%.
3) Communicate the various insurance options available. Understand the differentiators between coverages. What is and isn't covered? What kind of risk mitigation and response services are offered? What is the insurer's approach and track record in responding to the leading cyber claims, such as ransomware attacks or funds transfer fraud?
4) Offer cybersecurity recommendations. Share articles and cyber data reports and be a vocal advocate for cybersecurity and cyber insurance on social media. This will establish you as a leader and go-to source for cyber insurance.
Leading in cyber will demonstrate to clients that you are committed to addressing their greatest risks with a product that is here to stay.
Shawn Ram is head of insurance at Coalition Inc. (coalitioninc.com).