In a perfect world, we know the answer is yes. We should offer them every coverage available in order to cover our potential E&O exposure, but that is not reality. So what should you do?
Well, there is not really a way to make your client’s insurance program “airtight”, so you should discuss the GAPS in their program and ask if they want to explore an option to fill them. Does this mean getting more applications filled out and submitting for quotes? Thank goodness, no. Otherwise, we might do a lot more “practice quoting” than we need to. So what should be your plan of action?
- You might want to come up with the top 10 insurance gaps or shortfalls in most small business insurance programs. I would put, lack of cyber insurance (network security and privacy) on that list, and depending on what type of service they provide, professional liability insurance. Of course add higher crime limits, business interruption insurance and insufficient property limits to that list. Keep in mind this list will evolve over time and you need to stay up to date on changes going on in the industry.
- Learn the markets available to you for some of these coverages and get an idea on the minimum premiums for these coverages. Cyber liability can start at $260 a year and professional liability can start as low as $750. I think your clients may have a much higher expectation of what these coverages cost and by opening their eyes you will them to move forward with taking a serious look at potentially filling these coverage gaps.
- Lean more about these coverage options, especially cyber liability. Many agents are not “techies” and do not have a comfort level getting into deep discussions about this coverage. I took a 9 hour online course to give myself the “building blocks” I needed so that anything I learned would help deepen my knowledge of this type of coverage. There have been a large number of trade journal articles on this subject in the last few months and they will help to build a comfort level too.
- By looking at carrier claim examples and industry loss scenarios, you can have material to discuss with your client. Most clients do not think it can “ever happen to them” and have not played through loss scenarios, how they would react, how long they might be out of business or how they would recover.
- Quick indications. There are a number of markets who have online platforms that allow you to get a quick indication with a minimum amount of information. You may not be able to get a firm quote, but you will have something more in depth to discuss with your client.
- Explore tools out there that help clients realize their actual exposure. There are even some testing services that will help clients realize how “open” they actually are to claims. There are also tools that can show the actual costs associated with a data breach and how much it would cost them based on how many records where breached.
- Purchase it for your own agency. It is always easier to go in with confidence if you believe in the product and carry it in your own agency. You may be surprised on how little it costs.
- Don’t rely on “throw in” coverages that are in many carriers’ enhancement endorsements. A $25,000 limit will be woefully inadequate in the event of a loss.
- Ask more questions. Like how much data do they have on their phone, on their laptop or on jump drives? Do they collect “personally identifiable information”? Are they subject to specific regulatory or privacy requirements such as HIPAA or red flag rules?
- Start to think that these coverages should be an essential part of the client’s complete insurance program and not just an “optional coverage”. Just stating things in this manner may get your clients to start thinking more like you do and head the advice you are giving them.
You have to start somewhere. You may surprise at how easy this coverage is to sell and how much clients really want and need the coverage. One of my favorite TV shows now is CSI Cyber. It alerts me to new and evolving exposures out there and how much the world is connected. It surprised me that people would want to hack or destroy data but it is just a part of life any more. Learn a little bit more about these evolving exposures every day and you will build confidence in suggesting this coverage to your clients and properly protecting them.
A list we compiled of all the professional liability exposures out there can be found at: http://www.intlxs.com/intlxs/assets/pdfs/errors-and-omissions.pdf Over 400 classifications!
Kenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk. Kennethkukral@intlxs.com 800-937-3497 ext 2079