This article was produced in partnership with Travelers Europe.
Mia Wallace, of Insurance Business, sat down with James Fone (pictured) and Chris McMurray, of Travelers Europe, to discuss how brokers can have better cyber conversations with their SME clients.
Higher quality, not higher quantity is the name of the game when it comes to successful insurance communications but what goes into having the right conversations? It’s a pressing question for brokers, particularly those operating in the SME space, where the challenges and opportunities facing their clients change so frequently.
The first step to answering this question, according to Travelers Europe’s regional distribution manager James Fone, and cyber lead Chris McMurray, is for brokers to develop an objective and evolving understanding of the lay of the SME land. It’s a segment that was hit particularly hard during COVID and which is now facing significant financial upheaval as the impact of inflation cuts deep.
As a result, McMurray said, it is understandable that spending additional income on new coverage options is low on clients’ lists of strategic priorities. Unfortunately, the sector is also facing a crunch-time moment when it comes to cyber – with some two-thirds of SMEs having reported suffering at least one cyberattack in the past year.
“From my experience in the cyber market,” noted McMurray, who recently joined Travelers after an 11-year stint at Chubb, “what we’ve seen is a significant hardening of rates over the last 12-18 months. The general opinion in the market is that there’s likely still a bit of hardening to come and this [market correction] will probably not level off until towards the end of the year.”
This challenge is compounded by the fact that across the cyber insurance market, a lot of insurers are cutting back on their appetite and capacity, Travelers, however, is bucking the trend, displaying a strong desire to write business and it has a wide appetite, backed up by its robust approach to underwriting.
“Cyber is one of the widest appetites we have [at Travelers], in terms of the number of sectors where we’re interested in writing business,” added Fone. “It’s very complementary to all of our other lines of business – whether it’s manufacturing, education or solicitors, etc. It’s not just one line of business that Travelers wants to be known for when it comes to cyber.”
Armed with this understanding of where the SME market stands and how the cyber insurance space is positioned right now, brokers can establish a greater understanding of what clients are looking for – and where they fit in providing that. And given their shared expertise in the cyber insurance space, Fone and McMurray have several top tips to offer brokers looking to have better cyber conversations with their SME and micro-SME clients.
“The role of the broker is to provide clarity and insight to clients around their cyber insurance needs,” Fone said, “and this has to come, first and foremost, from insurers.”
“Cyber is one of the most talked about but also the most misunderstood coverages from a broker’s perspective,” he said. “It’s also one of the most fast-paced and changing insurance environments which makes it really difficult for brokers to keep up with what’s going on.”
“That’s why Travelers takes its responsibility to provide accessible, factual and timely information regarding why businesses need cyber cover so seriously. Brokers do tend to ask for specific industry sector claims examples and stories to share with their clients,” he said, “which highlights the power of everyday examples to illustrate how cyber relates to an SME.”
“Sometimes it’s about simplifying it as best as you can,” added McMurray. “For instance, brokers are often familiar with what is required on a property policy regarding locks, fire alarms, etc. And I think sometimes taking some of those cyber security controls and actually relating them to something insureds are used to - for example, how firewalls and antivirus software are like having locks on the windows for a property policy – actually puts it in a language that makes sense.”
“A key benefit of creating accessible conversations around cyber is that these allow businesses to think about their own cyber exposures in a less hypothetical way,” Fone said. That remains critical as though cyber has moved up by the priority list of SMEs’ risk profiles over the last decade, there’s still a gap in the perception of SMEs regarding their own exposures – which brokers need to address.
“Among a number of SMEs, there’s still the idea that cyber risk is something that applies to large organisations and not them,” McMurray said. “And it really couldn’t be any further removed from reality because threat actors now know that SMEs are, in some sense, the low-hanging fruit.
“That’s because they don’t have the budgets of large organisations to spend on cybersecurity protections, perhaps, or a tested disaster recovery plan, or a dedicated in-house IT security expert. They’re more vulnerable to successful attacks and, from a threat actor’s perspective, they’re quite a quick, easy win.”
Addressing the perception of cyber risk really comes down to getting the education piece right, and training is critical across the entirety of an SME business – not just for the business owner but every employee, whether working from home or otherwise. Take something like multi-factor authentication, which is now a prerequisite of cover for many insurers, including Travelers - brokers need to be at the forefront of promoting the role of training in proactively offsetting cyber risk.
The point that’s often missed when it comes to cyber insurance, McMurray noted, is that it’s not just there to indemnify at the point of a loss but – and arguably more importantly – to provide access to specialist instant response services when something goes wrong. That incident response is absolutely the key part of the policy, as that specialism can get the insured back up and running as quickly as possible.
It also provides an SME with access to skilled experts in the necessary fields to manage an incident, he said, which they would be unlikely to have readily available themselves without the policy. In addition, a Travelers policy, for example, provides insureds with access to several pre-loss mitigation services that the insured would not have been otherwise able to access due to prohibitive costs or time constraints.
“The take-up on these services can be quite low,” McMurray said. “And so as insurers, we need to work with brokers and insureds to explain the overall offering around cyber rather than just making this a box-ticking exercise that will result in the payment of a claim when something goes wrong.”
“Looking to the SME market,” Fone said, “brokers are in the challenging position of trying to sell this critical cover to businesses whose expenditure concerns are front-of-mind right now – and they are facing the inevitable question ‘why do I need this cover?’ In order to be able to answer that question honestly, brokers need to be completely aware of the full range of services that a cyber insurance policy provides, and be able to translate that for their clients.”
“The role of Travelers is to articulate why a client needs cover, but it’s also very much down to brokers to keep up to date,” he added. “And that’s about articulating what happens at the point of a claim, like Chris mentioned. It’s also being able to explain what kind of professional support kicks in when a breach happens, and how this support can minimise damage to many aspects of the client’s business and get them back up and trading as quickly as possible.
“I think that's the key thing for a broker to articulate to an insured - what do you get for your money if something happens? But really it all comes down to education, that’s the word I would underline here, and it’s our duty as insurers to educate brokers so they, in turn, can educate their clients.”
James Fone is Traveler Europe’s Regional Distribution Manager where he is responsible for leading sales growth, business development, broker distribution and relationships within the City of London. Chris McMurray is the newly appointed Cyber Lead for Travelers Europe and joined after an 11-year stint at Chubb. Travelers Europe was recognized as one the Best Cyber Insurance Companies in the UK. Read the full list of winners in 5-Star Cyber special report.
