How To Sell Cyber Liability Insurance
Insurance | Alan T. Harkabus, AAI | Jan 18 2019
Risk is everywhere. As more and more financial activity and actions move to digital, risks continue to increase. A recent Fortune article even claimed that U.S. CEOs are more worried about cybersecurity than a recession. From email to actual payment transactions, cyber liability is hugely prevalent topic for both the average consumer and business owners.
Because of this, you’d think that more customers of agencies or brokerages would be asking about or purchasing cyber liability insurance. Sadly, though, that’s not the case. In my experience – both at A. B. Gile, Inc. and through conversing with peers – many agencies or brokerages won’t do much more than say, “Hey, I’m offering it.” I’m here to tell you not to shy away from it.
The biggest barrier, then, is for your sales teams to understand what they are trying to sell and how best to communicate that.
Cyber Liability Insurance: The Basics
Pretty much any commercial customer with a connection to the internet could benefit from cyber liability insurance. That being said, it is most definitely crucial if a business collects Personally Identifiable Information (PII), such as credit card information or payroll records. Some cyber coverages can even cover information within a written form that is left on a desk. For example, if a customer using a payroll service has shipped out records and is supposed to receive a check back and that check gets lost in the mail, then that would be a cyber claim.
On average, the cost of a cyber claims with, versus without, insurance coverage can be upwards of $200 per record. To translate, if your data is hacked and credit card numbers are stolen, that would mean $200 per each customer account. With that, cyber liability insurance is broken into two major segments:
- First party – The claimant’s own hardware or software is damaged. This includes ransomware attacks and the latest social engineering.
- Third party – An outside party’s information or identity is damaged. This includes lawsuits that might be against a business as well as contract breaches and credit damages.
So… How Do You Get Started With Sales?
Ultimately, I have two stand-out tips for those of you struggling to boost sales of cyber liability insurance.
Take Time to Understand the Coverages
Like I shared already, not every person who sells insurance or services insurance knows products well (or knows all of them), depending on their focus. Depending on what the exposure or the potential loss is for your client, the factors may not be enough. Catering to your customer is going to take you miles – especially given that there are standard cyber liability policies that they can buy as well as endorsements that go on a regular commercial policy. With a major loss, endorsements will not provide enough protection for the customer, and you might need to spell that out.
Tell Customers Real-life Stories
By “real-life stories,” I mean horror stories from the front lines. Background information on the importance of this coverage that stems from actual clients who have had alarming claims is the top driver to purchase that I have seem.
My favorite example? Several years ago, a single-location pizza restaurant in Maine had a data breach that led to the hacking of credit card information for 700 transactions. Doing the math, at $200 per transaction (noted above), the cost to the restaurant was upwards of $140,000. If you compare that to the 2014 Home Depot hack, the costs skyrocket to around $19M. A standard commercial insurance policy without any cyber coverage does not cover these types of losses.
If you haven’t had a claim yet, use Alan’s examples as a starter to convince your customers! For more tips and tricks from the Applied Client Network, browse the community forums or register for an upcoming webinar.
Tags: Insurance , Cyber Liability , How To , Sales