So many questions, so little time. This is a very common pain point among cyber insurance brokers, who are often forced to trawl through 40-page application forms with several different insurance carriers to find an adequate solution for their clients.
Andrew de Groot, VP of enterprise accounts & international sales at Relay Platform, said many carriers have “extensive” cyber insurance application, endorsement, and supplemental forms, which are cumbersome for brokers.
“The more progressive carriers and insurtechs have actually started to move away from that and use scans and other technology to understand the risk better than a 40-page questionnaire,” he said. “That’s been a big shift. Reducing the question set [eases] the challenges for brokers.”
Relay Platform is an example of an insurtech that is challenging the status quo in cyber insurance. Built for both modern and traditional brokers, Relay provides a friendly interface where they can fill one unified application form and use that application to collect various cyber insurance quotes instantly or through an enhanced email process, and create proposals automatically.
“We work with carriers that have APIs and other components of [connectivity] to not only consolidate multiple applications so the broker only has to fill a single application, but we also reduce the question sets,” said de Groot. “From a broker perspective, instead of going to multiple portals and filling out multiple multi-page forms, they can go into a placement platform and fill out one application, and, through APIs, they can get instant quotes from carriers.”
De Groot said the work “is fun” despite the challenge being significant. He added: “While two questions might seem identical to a broker, they can mean wildly different things to the carriers. That consolidation effort is [central] to what we do.”
Dan Lewis, SVP and management liability practice leader at Gallagher Canada, agreed with de Groot that the lack of uniformity in cyber insurance application forms is challenging for brokers.
“We can look at five different FI bond policies and five different directors and officers (D&O) liability policies – and they’re pretty similar; they’re court tested. Cyber insurance forms are [not as uniform], and it’s a challenge for brokers to understand and explain the differences between each new wording,” said Lewis. “That creates broker errors and omissions (E&O) issues for us, so we really have to try and pay attention to those things and explain the differences properly, especially to sophisticated clients.”
Some cyber insurers – both the tech-savvy traditional carriers/MGAs and the insurtechs - are using tools like network and software security scans to reduce the number of questions they need to ask in application forms. Now, insurers are refining what questions they need to ask in order to make the underwriters’, brokers’ and clients’ lives easier.
“There’s a lot of good in giving our underwriters tools to be better risk selectors,” said Greg Markell, president & CEO of Ridge Canada Cyber Solutions Inc. “If there are tools and [insurtech] that can be layered into the [application] process that are tried and tested to help with risk selection, risk identification and control identification – I think that strengthens the industry overall.”
According to Lewis, cyber “is not as sticky” as a line of business like primary D&O. He explained: “I’m probably not going to move a primary D&O policy for any minor reason. It’s going to take something major, and it’ll need to be approved by the board, and because of continuity issues […] you don’t move [re-market] those policies very often. But something like cyber isn’t very sticky, so you can move from carrier to carrier year-over-year. You don’t necessarily want to do that, but it certainly is possible.”
Markell said brokers are having to move their clients every few years because of pressures in the marketplace and changes in appetite. “It’s the reality, it’s more work, and it’s more stress on the bottom line of the brokerages as well,” he said. “We’re all under a lot more pressure.”
Under such pressure, any efforts to use technology to simplify the cyber insurance application process are welcome, the three experts agreed.
De Groot, Lewis, and Markell shared their commentary in a ‘State of the market’ panel at the Net Diligence Cyber Risk Summit in Toronto.
