Advisen FPN

Advisen Cyber FPN - Thursday, September 8, 2022

Cyber brokers see their advisory roles expand as underwriting evolves


Cyber brokers see their advisory roles expand as underwriting evolves

Alex Zank, Advisen

Cyber brokers say their role in advising clients has expanded alongside evolving threats and increasingly technical underwriting requirements to one that requires subject-matter expertise, more frequent communication, and tailored advice based on client needs.

Several years ago, the softer market meant good pricing and broad coverage. That changed amid the COVID-19 pandemic, the rise in remote workers, and a dramatic uptick in ransomware attacks.

“You can’t skate by as a cyber broker anymore,” Dan Burke, Woodruff Sawyer’s national cyber practice leader with, told Advisen. “Cyber is a line of insurance that requires expertise, and if you don’t have it, it’s going to be very apparent in the results you get.”

In recent years, insurers responded to rising threats like ransomware, business email compromise, and social engineering with steep rate hikes and more technical underwriting. Clients face detailed application questions, strict security-control requirements, and new sublimits and exclusions.

“As the insurance companies have increased their underwriting scrutiny and requirements, asked more questions, and expected more security protocols and procedures, so has the need for consultation around that,” said Alexandra Bretschneider, cyber practice leader at Johnson, Kendall & Johnson.

Explaining the new requirements to clients has been another challenge for brokers.

“One of the big things that brokers do is manage expectations of their clients, and it has been extremely difficult to manage the expectations of clients when it comes to how much effort and information is going to be required as part of the underwriting process,” Burke said. “It has been the single-most dramatic change in the cyber insurance buying process.”

In order to prepare for the more technical questions, many cyber brokers now work directly with clients’ security teams, including chief information security officers and information technology (IT) departments, in addition to insurance decisionmakers.

“That’s been an added benefit for lots of brokers,” said Nadia Hoyte, national cyber practice leader with USI Insurance Services. “We’ve been able to increase our education, become a little bit savvier … it better positions us to have those conversations with insurance companies to truly advocate for our clients.”

Brokers said they now reach out months in advance of an application to ensure a client can respond affirmatively to underwriter questions. Organizations often need that much time to implement new security controls or enact other policies and procedures. Some brokers have beefed up their in-house expertise to help advise clients.

“We’ve grown our team in a number of ways to ultimately help our clients understand what is being asked of them from the underwriting community before we get in front of the underwriter,” John Farley, managing director of Gallagher’s global cyber liability practice, said. “Our job is to precede some of that, and to help translate the CISO speak so that our risk managers can truly understand what is being asked of them and what is being expected of them.”

Cyber requirements and security controls aren’t one-size-fits-all, either. Insureds will have different areas of focus depending on their size and industry sector, according to brokers. Manufacturers are more focused on business interruption, for instance, while law firms typically worry more about protecting sensitive client data. Brokers must understand those different areas of concern and prioritize them with clients during the application process.

Going forward, the next challenge for clients and brokers will be figuring out how much coverage to buy, said USI’s Hoyte.

Brokers must “elevate the conversation around what limits clients should buy, so that if they self-insure, they understand what they have to put away in the cookie jar,” she said, adding, “Now the question has pivoted to, ‘How much should I buy? Should I utilize my captive? What other types of alternative risk structure can you offer? And how can you create a value around that?’”

If buyers question the need for cyber insurance, Bretschneider said brokers can demonstrate the value of a policy by sharing data on the cost and likelihood of breaches. They should also emphasize the access to resources and expertise clients receive as part of a policy.

“Without coverage, it is incumbent upon the business to figure out what types of law firms they may need and what compliance they may need to consider from a regulatory standpoint,” said Bretschneider. “It’s up to them to find someone to help comb through and repair what’s happened. All of those services are actually afforded to you from highly qualified, experienced organizations, part and parcel to the policy you’re buying. There’s a major security blanket that comes with that.”

Reporter Alex Zank can be reached at