There is a very large untapped market for selling cyber insurance to small businesses. How can brokers best approach small business owners to offer them cyber coverage?
A recent 2018 study of Canadian “smaller businesses” by Scalar Security* found that it costs each employee of a small business an average of more than $12,000 to respond to a data breach. The average breach shuts a small business down for a cumulative average of 59 hours, costing the organization just over $ 1 million in lost revenue.
And yet, 36 per cent of individual business domain holders didn’t spend a dime on cybersecurity protection in 2017, according to a study released in March 2018 by the Canadian Internet Registration Authority (CIRA).
So, small business owners need a policy. Brokers want to sell them the cyber coverage they need. How do brokers make that initial connection with small business owners?
Primarily by referral, says Plamen Petkov, vice president for Ontario and business resources for the Canadian Federation of Independent Business (CFIB), which represents about 110,000 small business owners across Canada.
“The best approach is if you are referred by somebody – somebody they know, somebody they trust,” Petkov told Canadian Underwriter last Thursday. “Cold-calling can also work, but you have to be persistent in trying to catch the business owner at a good time, perhaps to book a more detailed conversation on the phone or a face-to-face meeting.”
Patience is key, says Petkov.
Ideally, the broker should meet the business owner face-to-face; once the broker is in the door, the broker should avoid being aggressive and trying to make that sale on the first meeting. The first meeting will be a time to establish a rapport with the business owner and for the broker to make it clear very early what kind of value they are bringing to the table.
Miki Ho, underwriter for cyber liability insurance at Beazley Canada, says one quick way to establish the value of cyber early is to ask the small business owner how they would respond to a ransomware attack.
Brokers are typically small business owners themselves, which may give them an advantage in talking to small business owners. Brokers can offer the experience of their own brokerage to provide examples of cyber coverages and how they work for small business.
“Brokers are running a business, they are entrepreneurs,” says Petkov. “They have a bottom line to meet, a payroll to meet. It gives them that advantage when one business owner is approaching another business owner. They speak the same language. That is absolutely very helpful.
“Brokers can relate. They can say, ‘From one business owner to another, I have a firm that I am running, these are the types of insurance products that I need to keep my business safe and successful, and that’s why I am recommending that you do the same.’ That provides that extra level of association, from one business owner talking to another.”
Brokers meeting with a prospective client should assume the client already has an insurance program in place. The small business owner may be happy with their existing insurance provider or brokerage and have been with them for many years. The broker seeking a new relationship may not get far by simply trashing the client’s existing program to replace it with a new one.
“Present yourself as a partner, even as a complementary offering to what the business already has, instead of trying to sever that relationship,” Petkov advises. “In some cases, it may be more beneficial to provide additional coverage for something they don’t already have while allowing them to maintain that existing relationship. Over time, you are competing and gradually trying to win that business.”
*-the Scalar Security study defines “small business” as 15-249 full-time employees. Industry Canada’s definition is 100 or fewer paid employees.