Chris Cotterell, chief executive of SafeOnline, is an old hand in the world of cyber risk. Establishing his firm in 1998, with the internet in its infancy, he built a business on the belief that specialist policies would be central to securing a brave new world – a hunch that has come to fruition. Cyber is the topic du jour, and, as Cotterell points out, the market has come full circle.
“Surprisingly, perhaps, things haven’t changed that much since 1998. Back then people were looking at the beginning of the internet and trying to work out the risks it might bring. While many of the risks people thought might occur in 2000 never transpired, I was absolutely right to think cyber wouldn’t be wrapped up with other policies. Obviously at the moment this has now come right to the forefront of peoples’ minds,” he says.
While the profile of risks has shifted – two decades ago the prospect of digitally disrupting a supply chain at a distance of thousands of miles was more science fiction than reality – the role of the broker when it comes to placing policies has remained surprisingly steadfast: “With cyber you look at the company, you look at the management in place, and how they’re carrying out acquisitions. If you’ve got a company that’s looking to expand its reach very fast and not really integrating their systems and culture, then it leads you to question if they actually have a credible cybersecurity plan.”
Failing to spot a risk that turns out to be critical for a client in the long run is one of Coterrell’s nightmares, and he points to brokers’ increasing desire for comprehensive errors and omissions (E&O) policies themselves to cover themselves in the event of their clients being hit by unforeseen vulnerabilities: “Ultimately, if we fail to spot a client’s particular need it could fall on our own emissions and errors policy – which is one of the reasons brokers are being so careful about their E&O policies at the moment, often asking for as much coverage as possible.”
According to Cotterell this is a key reason driving brokers to diversify and to push into new business areas. “This is why we’re going into different areas – working with asset managers, for example. We will look at different verticals and come up with a programme where there isn’t a gap,” he says.
In practice, what this means for specialist brokers such as Safeonline is a need to expand the coverage they offer in ’verticals’: policy areas that offer a structured approach to covering risks posed by systems in a particular area – such as terminals and ports or hospitals, for example. Part of this centres on a focused description of the exact risk being covered.
“What we try to do is to go to underwriters and say ‘this is the concept of the solution we are trying to provide, and what we are seeking to cover.’ Ultimately of course, everyone is focused on serving clients as effectively as possible, and if an underwriter can see the clear concept of the cover you are trying to provide, they are more likely to accept a tricky claim if it occurs.”
Cotterell makes the point that as a specialist broker if you are able to demonstrate to underwriters you have deep knowledge and expertise, they are more likely to understand what you are seeking to achieve and cover a difficult claim, should it occur.
So where does the future lie for Safeonline? As large brokerages move to offer clients greater value by expanding into consultancy and modelling, Cotterell sees a different, rosy path for independent firms.
“We think we’re well positioned as an intermediary,” he says. “We’re of course seeking to grow our books with people being able to buy policies through a convenient, well-resourced online system. Alongside individual policy writing we will continue to develop policy ‘verticals’ – overarching segments that focus on covering specific risk events.”
He cites the recent expansion of the US Terrorism Risk Insurance Act (Tria) to cover cyber risks, saying the size of Safeonline meant his team could act nimbly and interpret what it meant for their business and clients over the course of a day. As the biggest brokers take months to respond to change, smaller and medium-sized firms respond much quicker to a fast-shifting segment of the industry, he says.
Expansion may be on the cards over the long term, but Cotterrell is adamant his priority is to expand Safeonline’s book of business, to stay neutral, and work with the best in the industry:
“We like to bring in the right people for the right job. We like to be neutral in the market, and it’s a great position to be in; we work with everyone in the market.”