Welcome to the Chronicles

Each month we will share moo-ving stories and insights from the cyber insurance and cybersecurity industries. To read additional articles, visit cowbell.insure and subscribe to our blog. Together we can build a cyber-resilient economy - protecting small and medium-sized enterprises (SMEs), and mid-market businesses from advanced cyber threats.

How Agents and Brokers Can Step Up to Combat Cyber Risk

Over the past decade, the shift towards conducting business online has been transformative for small and mid-sized enterprises (SMEs). And it’s set to grow exponentially – as a Capital One shopping report predicts global e-commerce retail sales to have reached an estimated $6.31 trillion in 2023.

But the digital landscape doesn’t come without new challenges and cyber insurers are now actively collaborating with agents and brokers, to help combat cyber risk for their SME clients. SMEs are increasingly becoming targets for cyberattacks, as hackers recognize the potential for financial gain from data breaches. According to a Verizon study, 46% of cyber breaches impact companies with less than 1,000 employees. And without the cybersecurity resources of their larger peers, SMEs are perhaps more at risk and under greater pressure to protect themselves adequately.  

While the primary responsibility for assessing and managing cyber risk lies with the cyber insurer, agents and brokers have huge potential to be catalysts for change, particularly in advocating risk management and cybersecurity as a strategic investment. But without taking a holistic, risk management-focused, and future-proof approach, they can leave their clients wide open to the evolving costs and consequences of a cyber incident.

The 4-stage cybersecurity framework for brokers to truly protect their customers against risk

Harnessing the collaborative nature of the broker-insurer relationship will be the key to navigating the complexities of the digital landscape and effectively managing cyber risks. With this in mind, the following 4-stage approach will ensure SMEs are protected for today and the future:

The Foundation – education

For agents and brokers to protect their SME clients, they need to understand the risks and the significance of anticipating potential threats before they materialize. While the insurers and business’s CISOs or risk managers bear the primary burden of evaluating and managing cyber risks, brokers play a part in educating their clients about cybersecurity best practices and can suggest the tools and guidance needed for proactive risk assessment.

Cyber insurers can provide risk analysis or reports for each insured, organize training sessions, or leverage educational tools and content from webinars to enhance the awareness and preparedness of SMEs. Topics such as recognizing phishing attempts, securing sensitive information, and implementing basic cybersecurity measures are foundational to building a proactive framework and defense. 

Hyper-personalization – solutions crafted for unique business needs

Proactive cybersecurity isn’t just an expense; it’s an investment in financial protection. A comprehensive risk assessment tailored to the specific needs and vulnerabilities of the client is a good place to start. To make this happen, cyber insurance providers can actively assist agents and brokers in assessing the nature of a business, the sensitivity of the data it handles, and the effectiveness of existing cybersecurity measures. Again, it’s a collaborative effort that enables the development of customized solutions tailored to meet the specific needs of clients, ensuring a comprehensive and well-informed approach to cyber risk management.

With the insights gained from the risk assessment, insurance brokers can then work hand-in-hand with underwriters to craft a policy that provides coverage that is adapted to the size and industry of the client. Policies should reflect specific needs and cover both financial damages and the effects of reputational harm, for instance.

The After Effects – response and damage control

Beyond crafting policies, brokers should collaborate with insurance partners to assist clients in developing and implementing robust incident response plans, while helping ensure employees are well-versed in cybersecurity.

Establishing a clearly defined incident response strategy—complete with designated roles, communication protocols, and thorough testing before any incident occurs—enables businesses to minimize downtime and expedite recovery from cyber incidents. Given the potential for significant financial losses, agents and brokers should guide clients in comprehending the financial implications of various scenarios, ensuring preparedness for potential aftermaths. Good quality cyber insurance providers offer complimentary incident response plans, so setting up communication between SMEs and their insurers to develop a robust plan will set them up for success. They can also assist legal and compliance teams in navigating evolving digital protection laws through regular delivery of educational content and bespoke alerts. 

Considering the human error factor in many cyberattacks, particularly ransomware, promoting employee awareness regarding passwords, public Wi-Fi usage, multi-factor authentication (MFA), and security software is also paramount. Agents and brokers can suggest enrolling employees in cybersecurity awareness training courses as an effective means of safeguarding the business against future attacks. Alongside training, recommending tools that offer real-time, continuously generated recommendations to address cybersecurity weaknesses and identify opportunities for risk improvement can further mitigate potential risks.

Preserving Trust – continuous monitoring and updates

Since the cybersecurity landscape is ever-changing, agents and brokers should partner with insurers that have established mechanisms for continuous monitoring of their clients’ cybersecurity posture that will help these businesses stay ahead of potential risks and adopt measures to mitigate them. 

Cyber threats are dynamic, and the cybersecurity landscape is ever-changing. Recognizing this, brokers should partner with cyber insurers who are staying abreast of emerging threats, updating security protocols, and ensuring that insurance policies remain relevant and effective. Additionally, regular communication and regularly planned software updates help their clients stay ahead of potential risks and adopt specific measures to mitigate them. This ongoing response is critical to building trust and developing long-standing partnerships which is essential to maintaining business continuity.

Building Resilience – The path forward

Operational resilience is increasingly defined by cybersecurity in the modern workplace.  In the face of a progressively sophisticated and persistent cyber threat landscape, SMEs need proactive strategies to safeguard digital assets and maintain the trust of their customers. Insurance agents and brokers are stepping up to the challenge and their roles are evolving. By meeting clients where they are, deeply understanding both the external landscape and their clients’ risks and continuously monitoring and adapting strategies to mitigate new threats, brokers are on the offensive in this ecosystem. 

Collaboration between SMEs, agents and brokers, and cyber insurers is a cornerstone in building a resilient and secure business environment. Ultimately, agents and brokers will stand as catalysts for change, advocating proactive cybersecurity as a strategic investment.

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Originally featured in Insurtech Insights.

Shattering Silos: Uniting Underwriting and Sales Drives Profitable Growth

Three things are essential for developing long-term partnerships in our business: building trust, credibility and providing a seamless experience. When a client or broker works with us it is our responsibility to deliver on that, but often, there is internal division that can diminish the client’s overall experience.

There’s research dating back to 2007 that indicates “a historical friction exists in the insurance industry between risk management and sales. A major challenge facing the industry is to navigate this friction and empower both underwriters and business development channels to work in a collaborative environment… The key to success is being able to bring these two different, yet intricately linked, disciplines together as part of a seamless transactional environment.”

Brokers and clients want simplicity. They want to know that the person or team they contact is on their side, knows their business, and will ensure their needs are met. Collaboration between sales and underwriting is foundational to ensuring a comprehensive and client-centric approach. Sales teams are on the front lines, cultivating relationships with clients and understanding their unique needs and objectives and the underwriters delve into the intricate details of risk assessment and policy customization. By fostering a strong partnership, organizations can bridge the gap between client expectations and risk management.

This desire to create a positive and more integrated experience for clients is why carriers have streamlined their processes, shifting from transactional touchpoints to a fully connected policy lifecycle, with the addition of a “relationship management” function within the sales and distribution team. Without a centralized approach, a single client or broker may have to connect with five or more individuals – from risk engineering and underwriting to claims – throughout the lifecycle of their policy. This disjointed approach is not an effective way to grow a successful business yet is often so deeply ingrained. Many brokers are so used to the “market-facing underwriter” role that they often seek out direct dialogue with underwriters, as they know that they are the ones with the authority to write business and make changes to terms.

To understand how sales and underwriting can achieve greater harmony, I’ve outlined where these roles overlap, potential points of friction, and practical strategies to overcome them.

What are the Sales and Underwriting functions responsible for?

Both sales/distribution and underwriting teams can lead the way when it comes to bringing in new business, through new or existing relationships. First impressions with a new carrier are critical and effective collaboration can be the key to unlocking future success. Sales teams can benefit from underwriting data like risk profile insights and claims history to personalize their outreach to clients, increasing the likelihood of conversion while minimizing claims risk that could impact profitability. On the other hand, sales teams can share insights on client preferences, unique pain points, and industry trends to help underwriters make more informed decisions about pricing and coverage, enhancing the overall attractiveness of insurance products.

The functions can be complementary. Both teams are expected to drive overall growth and profitability; underwriters are held to standards within their line of business or segment overall, and sales teams for the amount and type of business brought in the door, the performance of those relationships over the long-term, and the ability for brokers to deliver the volume of business they agreed to at the outset of the relationship. These teams should work together to achieve the highest optimal output.

What causes disharmony between Sales and Underwriting?

Things can become out-of-sync quickly if an underwriter feels that the accounts being brought in from the sales teams are misaligned on expectations. This can happen if the account poses a significantly higher risk than the underwriter is comfortable with; if the account doesn't align with the company's underwriting guidelines; if there is insufficient Information to properly assess the risk associated with the account, or if the premium offered by the client is not commensurate with the perceived risk. Trust can be built by ensuring there is a clear understanding between sales and the underwriting teams on target appetite, client, and risk levels. This also helps reduce the likelihood of policies being issued to high-risk clients and underperforming companies and ultimately impacts profitability.

Similarly, the sales or distribution teams can feel they are in the dark if they aren’t brought in for relationship milestones, like building rapport in those first conversations, working to expand business during a renewal, or even getting feedback when the broker or client chooses to go to market. Every time there’s an opportunity to strengthen, build on or improve the relationship, a united front from the insurer would be an asset.

So how do we keep harmony at Cowbell?

Talk business, often: our sales and underwriting teams meet every week to talk through pipeline, broker visits, share feedback (with each other and from brokers), and plan for broker visits.

Learn from our colleagues: each team member brings strengths and weaknesses to the table. Being open to learning new skills or knowledge from each other means we can better serve our clients and our brokers, and provide continuous growth and development within our teams.

Manage our relationships: colleagues don’t just work side by side – many travel to the same events and attend the same conferences which results in spending a lot of time together. By putting in the effort to manage and deepen our relationships, and become friends even, we can be that much more effective in our roles. And have a little fun while we’re at it.

Our unique and integrated model: Cowbell’s unique structure puts business development at the heart of our day-to-day operations, whereas this takes place at a higher (and more removed) level for most of the commercial insurance market. This helps ensure all of our teams are constantly working towards a common goal: our client’s protection and success.

This synergy allows for a more accurate and tailored underwriting process, ensuring that clients receive the most appropriate coverage for their circumstances. Open and frequent dialogue expedites the underwriting process and ultimately leads to a more streamlined and efficient client experience. The result is a win-win scenario, the company has a lower risk of exposure to costly claims, happier clients, and more effective and empowered teams, helping drive healthy growth and profitability in a competitive market.

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Written by Michael B. , Regional Vice President, Sales and Distribution

Have ideas for future content? Email moo@cowbellcyber.ai and get in touch.