By Ken Kukral
One of the toughest conversations to have with a client is the conversation where you are trying to get them to consider a coverage they haven’t had before. The clients first thought is that if I haven’t needed it before, why should I buy it now? Or they think you are just trying to sell them more “stuff”. They probably already feel they are “insurance poor” and why should they spend more of their hard earned money on insurance.
The “new insurance” conversation for cyber liability is one you need to have with your clients. Both first party coverage and third party coverage should be discussed. While newer (in relative terms to my 26 years in the business) coverage such as EPLI has become pretty much standardized with only a few “bells and whistles” to differentiate the different policies, cyber liability is a wide open area. It is tough to do side by side comparisons since many of the carriers use different language, have different names for each of the coverage parts and have are very specific in their exclusions. All this can make your head spin, so what are you to do?
Well, my recommendation is to approach this “new coverage” discussion with your client in the following manner:
1. Familiarize yourself with the coverage. You do not need to be an expert to be able to sell this coverage.
2. Set up a checklist of questions to ask your client to assess their exposure to “cyber liability”. It is hard to “sell them” if you don’t have a good handle on what their exposures are.
3. Probe on what they feel their exposures are or what areas cause them to lose sleep. These are probably the most important pieces of information you need to gather. It will also help when approaching carriers to tailor the coverage to fit the client’s needs. You can better explore the “bells and whistles” of the different cyber liability programs in line with what the “hot buttons” are for your client.
4. Make sure you keep the discussion with your client at their appropriate technology understanding level. It will be very different when you are dealing with a technology savvy IT Manager versus a more paper and pencil CEO. Start to get too technical with a technologically illiterate person will only make their eyes glaze over.
5. Be prepared to discuss some of the regulations that they are required to be in compliance with. Some of these include the Red Flag Rule, Industry specific privacy regulations, state specific notification regulations and data breach regulations. Also discuss the trust their clients put in them to make sure their information is secure. For positions such as accountants, lawyers and insurance agents the “trust factor” standard is even higher. This coverage is there to help them recover from these type of information disasters.
6. You need to commandeer the application through the organization to get the appropriate person to talk to in order to get the information needed. This may include the CFO, IT Manager and Network Manager. Leaving an application for them to fill out will not work in this situation. Give them a deadline when you would like to have it back…. Since I am sure they are busy people.
7. When selecting markets to approach, try to find the one that best fits your client. Some programs are geared towards specific industries and have been tailored to fit their exposures. At max, you may want to approach 2 or 3 markets. Any more than that and you will have trouble comparing the options since they are numerous. Ideally you want to present one recommendation. More than that and you will have to be able to explain the differences between the two programs to the client and some of those differences can be minute and very technical.
8. Be able to give some loss examples for each of the coverage parts. You may want to give one loss example that spans over a number of coverage sections and show the potential costs that can add up in these kind of losses. If possible find a loss in their specific industry. This will help it to hit home.
9. Close. If you have done a good job of uncovering their exposures, the type of losses they can have and how this coverage could save their business from financial ruin, they should be ready to buy.
Don’t wait, if you don’t talk to your clients about this coverage, someone else will or they will read about it. If you are looking out for their best interests, you need to discuss this valuable coverage with them.