Right now, there are millions of employees working from home thanks to the pandemic. There are also millions of employees using personal computers and devices to conduct company business. A situation that was born of necessity has also given rise to plenty of cybersecurity issues: issues their companies may not be prepared to face.
Across nearly every line of business, remote work has put pressure on both organizations and the insurers who underwrite those organizations. Tougher scrutiny is being placed on a company’s risk management and business operations.
However, it is not just cyber risks that insurers are paying attention to. Insurers, responding to hardening markets, are delving deeper into an insured’s operations to determine a more accurate risk portfolio. From business interruption to commercial general liability to errors and omissions, insurers are looking for accounts that provide documentation on each facet of the business.
They are also asking tough questions. Directors and officers (D&O) questions include: threatened or actual litigation; any denial or indicated denial by a regulatory agency of any merger, acquisition or divestment, and; name of chief compliance officer and their qualifications. Cyber applications look for an active IT presence, encryption and multifactor authentication, and employee training as part of a solid cybersecurity plan. Employment practices liability (EPL) insurers are looking for evidence of active review of diversity, and how a company handles discrimination and sexual harassment claims. On crime applications, underwriters are looking for how finances are handled, who has access to systems and if transactions have multiple points of approval.
As organizations find their footing in a remote operations model, shopping for a better broker may seem like a daunting task. Amid a pandemic, many organizations want to improve their overall insurance program success, but are hesitant to shop around.
Yet too often, organizations try to piece together an insurance program with their existing broker. However, if your organization is putting together an insurance program without the help of an expert broker, you might be leaving yourself open to exposures you are not even aware of. Are you sure your broker has you adequately covered? What coverage options should you be considering, and is your broker providing the best options available to you? What other elements could be exposing your organization? Does your broker know? An experienced broker will know your business, and will understand the intricacies of coverage in order to adequately protect your business. By knowing how to select your next broker, you can vastly increase the effectiveness of your insurance program, and in many cases, the resources that are available to you.
Choosing The Right Broker
The worst time to realize that insurers are demanding more information and proof of risk mitigation is when your broker is sending out your renewal application. Your organization, and your broker, should be making your risk portfolio more attractive to an increasingly more selective insurer market. Providing any supplemental information along with the application, such as risk management assessments and coordination with the risk management team, show your company’s commitment to mitigating risk. So too can showing improvements made that offset any negative claim history.
A broker that has strong specialty areas within their business has that kind of understanding. Also, a specialty broker understands the claims trends, the market conditions, policy nuances and products that can help you address your risks. This can increase the effectiveness of your insurance program and, in many cases, provide you with access to an array of resources to help your organization improve its risk portfolio.
There are other criteria that your specialty broker should satisfy. Not surprising, these are the same criteria that insurers look for when making underwriting decisions. When shopping for an experienced insurance broker, look for the following:
1. Knowledge of Your Business
Does the broker understand your business? Your broker should have a familiarity with your business operations, not just with your industry. We recommend selecting a broker with specialty expertise in your industry, but also a track record of partnering with clients to understand each unique operation and its risks.
This knowledge helps insurers see your business as a good risk. A broker who prepares a client for the insurance application process makes that client’s business more appealing to the carrier. Brokers should understand what’s happening in the market, and what the carriers require from clients in order to feel comfortable underwriting the risks.
2. Understanding of the Products Available and Relevant to Your Business
This attribute goes hand-in-hand with understanding your business. For example, a D&O policy is tailored to a variety of products that address very different types of business. A D&O policy for a publicly traded entity would not be suitable for a construction operation. Your broker should understand what type of policy your organization needs.
Most importantly, your broker should understand which products your company needs. Instead of selling a general liability policy, your broker should be recommending products that fit more precisely. What is your errors and omissions exposure? Is your management professional liability coverage adequate for the activities your company engages in? What cyber threats does your company face, and what products best mitigate these risks?
Today’s market conditions can change rapidly. Understanding the marketplace, the product and its relationship to the market means carriers will underwrite better risks and clients will be better protected by right-fit products.
3. Value-Added Services and Resources
The best brokers have additional services at the disposal of their clients. Most will offer price comparisons, but an experienced broker, particularly in cyber, should have additional resources within their team to address a variety of client questions pertaining to their organization. For example, having access to cybersecurity experts and expert privacy counsel can help your organization build better protections for data security and privacy before, during, and even after technology has been put in place.
4. Ongoing Service
The best brokers will be an advocate for their clients not just at renewal time, but throughout the year. Your broker should have relationships with carriers and work with them on behalf of your organization. This demonstrates to the carrier that the broker is invested in the client’s success.
Advocating with the insurance company, establishing meetings with the underwriters, and educating underwriters on your organization and its risks is essential to getting the best coverage. Particularly given the current environment where there is a hard market and premiums are high, having that advocacy can help your organization appeal to the insurance community.
5. Responsiveness
The insurance broker should be concerned with taking care of both sides of the insurance sale — the carrier and the client. That requires managing the submission process, responding to underwriters, and making sure the client’s business is highlighted in the best possible way. The carrier needs a responsive broker and a broker that is eager to build a relationship with the underwriting team.
6. Claims Management
Your broker should also be an advocate at claim time. A great broker has a great claim process and enough personnel available to manage the claim lifecycle. Your broker should be navigating the claims process with the carrier and connecting you with the appropriate resources.
In fact, claims management should be part of the first conversation with a broker. What level of expertise do they have? What relationships have they established? How familiar are they with each carrier’s claims processes and reporting requirements? When you have a claim, who will be the liaison? With some larger brokers, junior staff are assigned to cases, and they may not have the intimate knowledge of your business and its risks. Your claims should be handled by a broker who has a solid understanding of your operations.
The Best Fit
The most successful insurance brokers are the ones who put effort into learning the business. Specialty insurance brokers know multiple lines of insurance from different perspectives: from the carrier perspective, client perspective and market perspective. The best broker is the one who can combine all three facets of the cyber insurance sale for a common goal: to best protect your business from loss no matter where your business is being conducted.
When selecting a broker, look for one that has the relationships with carriers and their underwriters, and that is dedicated to understanding the intricacies of the market and the nuances of your business. That magic formula will ensure the best insurance program for your organization, and protection now and into the future.
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