WHEN SELLING SECURITY SOLUTIONS, many channel professionals lead with the benefits of business continuity and protecting the prospect’s brand. There’s an ancillary benefit as well, though, that goes straight to their potential clients’ bottom lines: lowering the cost of their commercial insurance.
SMBs that can demonstrate to insurers that they’ve reduced their risk profiles by employing security solutions and services can often negotiate discounts. For every physical or network break-in they can deter, their “loss ratio”—the critical proportion of premiums paid in versus claims paid out that goes into underwriters’ calculations when renewing policies and setting rates—improves.
Good brokers will actively extract risk-related information from their clients, says Douglas Friel, vice president of commercial insurance at Newtown, Pa.-based brokerage Johnson, Kendall & Johnson Inc. Then they will use it to help drive down bid prices.
When their clients take steps to lower their business risks, such as adding IT security services, it puts those companies in a better bargaining position. “Insurance companies compete for their business, and their pricing gets aggressive,” says Friel, who has seen rates decrease between 10 to 30 percent.
Video surveillance systems are a great example. When installed in stores and restaurants, they can help disprove fraudulent “slip and fall” lawsuits by showing the plaintiff didn’t really fall, establishing that a fall was staged, or demonstrating that the individual wasn’t on the premises at the time of an alleged incident. Those technology investments can reduce a retailer’s liability insurance rates.
In childcare or senior living facilities, Friel says, surveillance cameras can lower the cost of “abuse and molestation” insurance. Video is also helpful at disproving claims of neglect or cruelty and helping to dismiss or prosecute bad employees.
Cybersecurity is another example. Many small business insurance offerings include cyber coverage. According to Rick LaFrance, vice president of the Northeast region for insurer Marsh & McLennan Agency LLC, of White Plains, N.Y., these policies “give insureds someone to go to when something happens.” They will notify customers if there’s been a breach of credit card numbers, for example, and some include crisis PR services to handle community and customer outreach as well. Rates for these clean-up-type operations are typically more competitive for those with firewalls and other protections in place, LaFrance observes.
Friel warns that brokers dig deep with their evaluations. When clients deal with sensitive health or financial information, for example, brokers may check to ensure they undergo annual penetration testing from a certified third party. The payoff businesses can collect for meeting such requirements, however, makes the effort more than worth their while.