In a recent interview with Insurance Business, Lindsey Nelson (pictured), head of cyber development at CFC, shed light on Canada’s pressing cybercrime challenges. “Canada has a massive cybersecurity problem,” she remarked, highlighting the country’s lagging government resources. With government cybercrime reporting tools still not fully operational, Canada is falling behind other nations in effectively combating cyber threats.
This concern is exacerbated by the low adoption of cyber insurance. A report from the Insurance Bureau of Canada revealed that only 5% of Canadian businesses have cyber insurance policies - a troubling statistic given the rising costs and frequency of cyber incidents.
In a follow-up with Insurance Business, Nelson delved deeper into the issue, emphasizing the pivotal role brokers must play in bridging the gaps left by the public sector. She shared actionable insights on how the broader insurance industry and brokers can work together to make cyber insurance more accessible to Canadian businesses.
Before diving into practical tips brokers can use to encourage clients to adopt cyber insurance, it’s important to take a step back. For clients to recognize the value of cyber insurance, brokers must first be able to explain it effectively. According to Nelson, the industry needs to move away from the perception that cyber insurance is a niche product requiring specialist knowledge. This mindset likely discourages many brokers from engaging in the space, as they may feel unqualified to discuss it confidently.
“What I think the market is starting to understand is that cyber is no longer a specialist product. It applies to every single business,” shared Nelson. “If you have a computer or an employee, cyber insurance is relevant. It can’t just remain the domain of one or two cyber practice leaders in major broking firms.” Nelson’s point is an important one, especially considering the prevalence of cybercrime in Canada.
“Canada is actually quite well-rounded in terms of the types of cyber threats businesses face - they get their fair share of everything,” Nelson explained.
Reports confirm this, as some of the most common cybercrimes in Canada include theft of electronic funds, ransomware, social engineering, and phishing. The total cost of cybercrime last year was estimated to exceed $3 billion , with 44% of organizations experiencing a cyberattack in the last 12 months. For Nelson, this underscores an urgent need for action. Brokers, regardless of their specialty, must prioritize upskilling and educating themselves on cyber insurance to better support their clients in navigating these risks.
Whether you’re a seasoned cyber expert or a broker looking to expand your knowledge, Nelson shared several practical dos and don’ts to engage clients effectively:
1. Don’t leave cyber discussions until the last minute
Many brokers mention cyber insurance only briefly at the end of client meetings, often as an afterthought. “We see a lot of our broker partners going into meetings with clients about cyber insurance, but they leave it to the very end of the meeting,” confirmed Nelson. This creates a scenario where clients are introduced to an unfamiliar product, told there’s an additional cost, and warned it addresses one of their biggest exposures—all within a few rushed minutes.
Do dedicate time to cyber insurance conversations
Make cyber insurance a central focus of client discussions. Schedule dedicated meetings to learn about the client’s business, identify their risks, and address questions step-by-step. This approach helps build trust and ensures clients understand the value of the coverage.
2. Don’t judge a policy solely by its wording
In the past, policy wording was the primary focus when evaluating cyber insurance. Nelson explained that the industry has evolved: “Five years ago, it was all about policy wording. Four years ago, it shifted to incident response capabilities.”
Do highlight proactive features of cyber insurance
Today, the focus should be on proactive measures and services that prevent cyberattacks. “It’s actually the services wrapped around the policy—on the front and back end—that brokers should make clients aware of, rather than focusing solely on policy wording,” Nelson said.
3. Test the credibility of cyber insurers
To ensure clients receive the best coverage, brokers should evaluate insurers carefully. Nelson recommended asking these key questions:
As Nelson pointed out, the latter question is particularly crucial in Canada, where the volume and severity of cyber events are on the rise.
Cyber insurance applies to every business, and the Canadian market must act accordingly. “If the insurance industry wants to remain relevant, [cyber insurance] has to be something that every broker learns and feels credible speaking about,” Nelson said. “As insurers, we should be helping brokers with these resources.”
