Tailoring the cyber product to the broker and business

Brokers worldwide are looking for cyber threat reports stripped of jargon that highlight actual threats individual businesses face, cyber underwriter CFC says.

“These reports are nothing new as a concept,” Lindsey Maher, CFC’s head of global cyber development, tells Canadian Underwriter in an interview. “But one of the gaps that we saw in the market…is [reports are] so riddled with security jargon, [brokers] are not able to effectively translate [the information] to clients.

“And equally, over the years that these [cyber threat reports] have existed, it’s done completely the opposite for brokers,” Maher says. “Whereas these were intended to be helpful conversation-starters for them, it’s actually blocking the sale for them because the client will have follow-up questions that [brokers] can’t answer or need something translated that likewise [brokers] can’t answer.”

To address this, CFC has created a Cyber Threat Reviews tool, written in plain language, that ties back to insurance policies and insurance language, Maher says.

The reports provide a side-by-side comparison of how much clients would spend on outsourcing security (without insurance) versus what they would spend on insurance, which includes security. This is benchmarked directly against a typical policy premium.

“If [clients] have to look at an either/or decision within their budget and see those two numbers in front of them, it should be an incredibly easy choice to offer cyber insurance,” Maher says. “[Cyber Threat Reviews] are, in essence, a broker’s sales tool to help aid their conversations and to help clients understand the value of insurance.”

The reports also break down threats and vulnerabilities specific to the individual business that have a high likelihood of leading to a loss or claim. This is intended to make it easier for brokers to discuss real day-to-day threats and their potential impact with clients.

“We only want to show the cyber threats that actually matter and that have causal links to claims,” Maher says. “I think there’s a significant difference between threats and risk, which is why we’ve not called these risk reports. They’re threat reviews. Every single business has a risk, and not everybody has a threat.”

The reports “tell the story specific to that client’s business based on their size, employee count, industry and geography, which I think is really important for Canada specifically as well, because a lot of markets come with either global or U.S.-specific statistics,” Maher says.

For Canada, it’s narrowed down to nine threats based on 25 years of Canadian claims data.

From specialists to generalists

In the Canadian market, Maher estimates less than 10% of small- and medium-sized enterprises (SMEs) are buying cyber insurance. “And that’s worrying, because Canada is largely an SME economy,” she says.

Historically, those selling cyber successfully in Canada have been dedicated specialists and cyber practice leaders, Maher says. “But it’s the generalist brokers who we’re really trying to touch with this,” she says. “We haven’t solved the simplicity of the education piece to help brokers with the sale, and that was the impetus behind [revamped cyber threat reports].”

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CU has heard generalist brokers are sometimes hesitant to sell cyber insurance, partially due to product complexity.

But cyber should no longer be viewed as a specialist offering, Maher says.

“The knowledge of cyber insurance and cyber risk can’t be consolidated to two or three cyber practice leaders in the country,” she says. “A generalist needs to be speaking about cyber because it’s not a specialist product anymore.”

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.