How Insurance Brokers Should Talk About Cyber Insurance

As an insurance broker, one of the most important roles you play is helping your clients understand the risks they face and how to mitigate them. In today’s digital landscape, cyber threats are among the most significant risks for businesses of all sizes. However, many business owners, particularly those running small to medium enterprises (SMEs), are unaware of how vulnerable they truly are to cyberattacks, and they often overlook cyber insurance as an essential layer of protection. In this article, we will discuss how brokers can effectively communicate the importance of cyber insurance to their clients, dispel common misconceptions, and become trusted advisors in this critical area of coverage. 1. Become a Value-Added Provider First and foremost, being a successful insurance broker is not just about selling policies. You need to provide value to your clients by acting as a trusted advisor who understands the complexities of their risks and needs. When discussing cyber insurance, focus on educating your clients about why this coverage is crucial, and explain it in a way that is relevant to their specific business. Tips for Becoming a Value-Added Provider: Understand the Client’s Industry: Every industry faces different types of cyber risks. For example, healthcare organizations are often targeted for their sensitive patient data, while retail businesses are vulnerable to attacks on their payment systems. Tailor your advice to the industry-specific risks your client faces. Explain the Financial Impact: Many clients think cyber insurance only covers data breaches, but the scope is much broader. Cyber insurance can help with business interruption costs, legal fees, and even ransom payments. Show clients how a cyberattack can affect their bottom line and how cyber insurance can safeguard them. Highlight Regulatory Requirements: In certain industries, like finance and healthcare, having adequate cybersecurity measures and insurance may be required to comply with regulations. Make sure your clients understand these obligations and how cyber insurance can help them stay compliant. By providing this deeper level of insight, you position yourself as a partner in your client’s risk management strategy, not just as a policy seller. 2. Be updated and give the best offers When speaking to clients about cyber insurance, it’s crucial to demonstrate that you have done your due diligence. Cyber risks are complex and ever-evolving, and clients need to know that you are offering them well-researched, informed advice. Steps To Be Updated And Give The Best Offers: Stay Informed on the Latest Cyber Threats: Cybercrime is constantly changing, with new threats like ransomware and phishing scams becoming more sophisticated. Make sure you are up-to-date on the latest risks and vulnerabilities so you can advise your clients accordingly. Conduct a Risk Assessment: Offer to conduct a cyber risk assessment or partner with cybersecurity experts to do so. This will help your clients understand their unique vulnerabilities and why they need specific coverages. Once you identify their exposure, you can recommend the most appropriate policy. Explain Policy Inclusions and Exclusions: Cyber insurance policies can vary significantly in terms of what they cover. Some may cover data recovery, while others might not cover legal expenses or business interruptions. Take the time to walk your clients through the policy’s specifics so they know exactly what they’re getting. When you show that you’ve thoroughly researched the product and understand the client’s needs, it builds trust and strengthens your relationship. 3. Use Cyber Insurance to Open New Doors Cyber insurance can be a great way to deepen your relationship with existing clients and attract new ones. In many cases, your clients may not even realize they need cyber insurance, or they may not think it applies to their business. This opens the door for you to have meaningful conversations that can lead to additional coverage or new clients. How to Use Cyber Insurance to Open New Doors: Address Common Misconceptions: Many small business owners believe they are too small to be targeted by cybercriminals. However, the reality is that small businesses are often seen as easy targets because they may not have robust cybersecurity measures in place. Present the statistics: 43% of cyberattacks target small businesses, and 60% of those businesses close within six months of the attack. This makes a compelling case for why they need coverage. Ask Open-Ended Questions: Engage potential clients by asking open-ended questions about their current cybersecurity measures. For example, “What would happen to your business if your systems were down for a day due to a cyberattack?” or “How would you handle the legal implications of a data breach involving your customers’ sensitive information?” These questions can help you identify gaps in their coverage and position cyber insurance as the solution. Leverage Cyber Insurance as a Lead-in for Broader Risk Management: Cyber insurance is just one part of a comprehensive risk management strategy. Use your conversation about cyber coverage as a starting point to discuss other areas of risk they may not have considered, such as professional liability or business interruption insurance. By using cyber insurance as an entry point, you can deepen client relationships, expand your book of business, and position yourself as a more holistic provider of risk management solutions. 4. Overcoming Objections: Addressing Common Concerns About Cyber Insurance It’s natural for clients to have concerns or misconceptions about cyber insurance. As a broker, it’s your job to anticipate these objections and provide clear, fact-based answers. Common Objections and How to Address Them: “I’m a small business; I’m not a target for cyberattacks.” Being a small business doesn’t mean you are immune to cyberattacks. In reality, small businesses are prime targets for cyber threats due to their often limited security defenses “I already have general liability insurance; that would be enough” Many clients mistakenly believe their general liability policy will cover them in the event of a cyberattack. While general liability insurance covers physical property damage and bodily injury, it typically does not extend to data breaches, ransomware, or other cyber risks. Cyber insurance is designed specifically for these incidents. “Cyber insurance is too expensive.” The