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Jonathan Lugo - The Prodigy
60 Plays11 months ago
Hey there! This week we have Jonathan Lugo, the Young Gun of Real Estate E&O, on the podcast. Listen in as he explains how he rapidly became a real estate insurance specialist starting from a high school internship. He shares insightful perspectives on focusing on niche markets, the value of coverage over price, misconceptions around cyber risk, and attracting young talent to insurance. He also discusses innovative approaches to educating clients and demonstrates how niche expertise enables simplifying complex risks. For anyone interested in learning directly from a rapidly rising insurance star, you won’t want to miss Jonathan's energetic insights on building niche authority.
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Transcript
Introduction to InsureSec Podcast
00:00:03
Speaker
Your federal seemed to invent your conversations at the intersection of cyber security, risk management and cyber insurance.
00:00:19
Speaker
Welcome to the InsureSec podcast.
Meet Abe Gibson and Jonathan Lugo
00:00:22
Speaker
Today's guest is Jonathan Lugo. I'm your solo host this episode, Abe Gibson. Super excited about this one. I've known Jonathan for a couple of years now, it seems. And I feel like I'm a baby in the industry, but if I'm a baby, then I don't know what that makes Mr. Lugo here.
00:00:49
Speaker
But yeah, super excited to have him on, tell his story. I want more and more people to know about him and the things that he's doing because the sky is literally the limit for this guy and how sharp he is and the way that he approaches the industry. So welcome to the show, man.
00:01:06
Speaker
Thank you, thank you so much.
Jonathan's Career Journey
00:01:08
Speaker
I think I've known you, I met you back when you were selling insurance products to insurance agents, and then you started your agency, knew you then, and then knew you since you've been in the brokering side. So yes, it's been a few different changes for you there and stuff. All in one.
00:01:34
Speaker
You've had to keep up with which company you're working for now. So great. So yeah, I usually try to start things off with, you know, who are you? You know, what's your background? Tell us the story, how you got here, how you got into insurance. Just give us the whole spiel, man.
00:01:52
Speaker
Yeah, so I got into the industry before I was 18. I just started an internship at an awesome local insurance agency. It was my parents' insurance agency and was looking for a two-week summer job just to try out some
00:02:12
Speaker
you know, new fields. So that was back in 2020 in March. So around that time is when I started getting into insurance. So I had just a two week internship. The
00:02:28
Speaker
main task was to just send out follow-up texts and cleaning our boss's office was on the list. It was very, very basic things. And then that two-week internship turned into a month and that turned into a summer.
00:02:43
Speaker
And that turned into a part-time job while I finished up school. And then as soon as I was done with my degree, then I joined full-time. So I've been full-time now for probably a year and a half, two years. So I just saw my 22nd birthday here coming up. Nice.
Navigating Insurance During the Pandemic
00:03:03
Speaker
Like you said, an infant in the industry. But I've learned a lot in the past.
00:03:09
Speaker
two or three years, moved into sales about two years ago. And so I've learned so much in the past two years.
00:03:21
Speaker
That's fantastic, man. And it's funny because I've heard multiple people tell me that they started something in March of 2020. And I'm just like, man, there must have been, what perfect timing to start something. So you said that you had the internship there for two weeks, then did you have to do everything remote after that?
00:03:44
Speaker
No, everyone else in the office room is remote except for me and our agency principal. So about 12 people went home and that's when I came in. So it was just me and the agency principal in the office for several months there. So that was a lot of fun having that one-on-one time. I didn't know how different it was until a year later when everybody
00:04:08
Speaker
came back. What a good opportunity though to get some some some like face to face probably a lot of with it just being you two probably a lot of great learning opportunities that worked out really nice.
00:04:24
Speaker
Yeah, we have 13 or 14 employees. And I feel like he's made so much time and really mentored me. So a fantastic model for agency principals wanting to bring on producers. That's one way. It's a little bit risky. You're hiring the one just out of high school and college. We've hired two or three other interns like that and had a good experience. But it wasn't for them. But for me, it worked out. And this is where I'm going to be for a while now.
Veritas Agency Model
00:04:53
Speaker
That's awesome. That's awesome. So kind of I always I always say that there's a few kind of smaller agencies and that depends on how you define it because you know when I was at better agency and we were primarily dealing with like three people agencies I would have thought Veritas was massive and then
00:05:12
Speaker
You talk to some other people, and they would say that Veritas is small. But in terms of local agencies or agencies with a regional presence, and I know that you write business all across the states, there's not many other agencies that I would point to and say,
00:05:31
Speaker
This is the example of the way that an agency should be run. And there's so much to Veritas that's like, man, this is the way that it needs to be done. Take us through the way that it's set up, because obviously there's Veritas, but then there's also like your email domains from secured. So tell us about them secured and the way it's set up.
Building Firmsecured and Real Estate Niche
00:05:53
Speaker
Yeah. So Veritas was the agency, our agency owner, Andrew Bellington,
00:05:58
Speaker
started back in 2009 from scratch and really everything has just grown as an overflow of his book of businesses he's hired on producers. So the agency here is 12-13 people. We do home, auto, life.
00:06:16
Speaker
you know, commercial, basically, basically everything we've got one or two, sometimes three people specialize in each area. And that's how that's broken out. About two years ago, when I started getting into sales, I was on the protege with David Crothers. And that really pushed me in the direction of
00:06:36
Speaker
finding a ditch market. My first few months of sales was very difficult because not only was I brand new in the industry, but I was also very young. And so I didn't have a lot of that just background, general knowledge on, you know, some of these industries. So I would be selling life insurance one moment, the next moment I'd be selling to a
00:06:59
Speaker
you know, general contractor, the next moment to an electrical contractor. And that was, that's very difficult for a 19 year old or 20 year old or really anyone. So that's, that's what pushed me in that direction. So the first assignment on the protege, the
00:07:15
Speaker
For those that don't know, that's the reality TV show that David Crothers produced was find three markets that you're going to focus on. And I've stuck with one of those three since the show two years ago. And that's what I'm planning to continue to grow in the next year. So about two years ago, I started my own brand inside of the agency. So the brand is firm, secure.
00:07:45
Speaker
And we work with real estate agencies nationwide.
Sales Strategy and Expertise in Real Estate E&O
00:07:50
Speaker
It's not difficult to get licensed in other states. It just takes a little bit of money up front. And I do most of my sales over Google Meet just like this, over the phone. And in the real estate space, that's not unusual. Google Meet call is already exceeding what they have. In many cases, oftentimes they're just dealing with a 1-800 number.
00:08:14
Speaker
And so if I can come in and do a 30-minute Google Meet call, regardless if we're a thousand miles away, it's still much more personal than what they've been getting in almost every case.
00:08:27
Speaker
Yeah. Yeah. So, so firm secured focusing the niche, there's the real estate brokerages. Take us through, you know, there's not many people in that space that specialize in real estate, you know, I'm kind of curious,
00:08:47
Speaker
I should probably be thankful. There's probably more information on cyber and just content out there available. If I were to want to learn about real estate, I have no idea where I'd even begin. Take us through how you went from not many years in the industry and not
00:09:12
Speaker
really having dealt with many real estate, you know, clients to becoming a specialist. How did you get there? Yeah, so you're right, there isn't a lot of information. And if I wanted to get into other niche like architects, E&O or attorneys, E&O, I don't exactly think that there is, you know, information on those necessarily out there. Cyber, I think changes a lot. And that's the tricky part with that information that's out there.
00:09:41
Speaker
But as far as E&O, what I did, and just the way it happened, it worked out. About two years ago, we had a real estate client that was our only one. We were trying to place their E&O. We noticed that their coverage wasn't great. And so we were just trying to find a carrier that would cover the risks that they had. And so we ended up finding a fantastic brokerage that
00:10:09
Speaker
specializes in real estate, you know, they've got a massive exclusive program and I worked worked out with them a deal. And so we've been writing business through that exclusive program since then. So really that mentorship of finding a good underwriter or brokerage, you know,
00:10:30
Speaker
I guess a VP or a president of a brokerage that focuses in that niche is really the way I've picked that up. He's taught me everything I know and then the experience of just diving in.
00:10:48
Speaker
Once you only prospect in one area and you see every single policy and every single last run and you talk to dozens and dozens and dozens of those agency owners in my case, then there's no way after reading those policies you're not going to become an expert. So for me the biggest thing was
00:11:11
Speaker
just diving in, committing to it, even when things came up on the friends that could have taken my attention away, just really focusing on.
Challenges in Real Estate Insurance
00:11:20
Speaker
This is the direction I go. I can be an expert here. I see the potential and just focusing on that and reading policies. That's huge. I've read every one of my competitors' policies I can get my hands on, and that's probably been the biggest advantage for me because the client doesn't know what their coverage is, but their agent probably doesn't know what their coverage is either.
00:11:50
Speaker
read their policy once, you're already coming in as an expert, even just hearing what the name of the character is. Sorry, that was a very long winded answer. No, no, that's great. And it shares a little bit of similarity to the way that I learned cyber. And I really wish that there was more training specific to these kind of niche specialty lines products.
00:12:20
Speaker
So maybe you should add that to your your list of career objectives, write a book on real estate, you know, because I'm sure a lot of people would would appreciate it. So cool. So that that takes us through through kind of the background and how you got here and how you how you pick this stuff up.
Educating Clients on Coverage Value
00:12:41
Speaker
Because I would I would imagine most of your most of your competitions probably a little bit
00:12:48
Speaker
I don't want to be ageist because it's 2023, but, uh, just generally in commercial insurance, it's usually some older white guy. That's the way it works. So, so how, how has that been, you know, being a younger guy, you know, working with these, uh, these real estate brokers, I'm sure it's somewhat of a shock, um, to see you walk in or, or show up on Google meet.
00:13:17
Speaker
Yeah. So, um, the, the thing that I'm noticing with just very specific to my niche, because that's what I can talk to, but hopefully it's still, um, you know, helpful in, in some other niches. But for me, um, when I'm looking at the real estate E&O professional liability and, and cyber, I'll talk about that in a second, but, uh, just, just the real estate E&O piece. I don't think that there is a large amount of, um,
00:13:46
Speaker
Let me put it this way. You mentioned the agent profile, who the agents are, what's their background. I honestly don't know because my competition isn't necessarily agents. It's about six national programs. And that's really where the competition is. So most of the time, my prospects and clients didn't know who their
00:14:10
Speaker
agent is. They just know it's a nationally recognized program. It's endorsed by their franchise, the real estate franchise. It might be the state program. There's 15 states that have a state program. It's owned by one of the largest insurance agencies in the world, and so they're not necessarily dealing with
00:14:31
Speaker
a friend or a broker that they know, it's a national program. The exception would be, I do occasionally right across people that have had a one-on-one relationship with their insurance agent and they just happen to really like them and it's usually because they pick up the phone and they've been with them for 25 years or they're related to them. Those are the only objections. Typically, I'm dealing at a program level
00:14:58
Speaker
You know, I've been with this program for years. They're endorsed by my real estate association. So that's why I've been. Got it. Got it. Have you, have you found that obviously you more than, you know, 99.9999% of the industry can speak to potential gaps. Have you, have you found that conversation?
00:15:26
Speaker
challenging or have people been receptive and see the value and I might save a little bit of money, but I'm giving up coverage. How has the overall prospect and client base been in terms of being receptive to a value message compared to a price message?
00:15:49
Speaker
Yeah, so in the real estate industry, I think it's a little bit easier than in some other industries, maybe like the construction industry. I think real estate agents are thinking about some risk and specifically I'm dealing with the broker. And so the broker in charge in a real estate setting is in charge of, you know, overseeing the transactions, there's all these laws surrounding what their duties are. So it's a little bit easier to have that conversation. I think the same feature of attorneys or engineers or
00:16:17
Speaker
architects or title companies. I think it's a similar conversation there. What I've done is I've drawn the line in the sand and said we're going to sell based on value. We have what we believe is the best
00:16:33
Speaker
coverage and carrier on this. It's exclusive, so in the back of my mind when I walk into a conversation it's I know 100% I can in almost all cases went on coverage and so now how do I communicate that to the prospect and I think if I have the right prospect in front of me it's received really well and as soon as we have this conversation
00:17:01
Speaker
as long as the price isn't, you know, outrageous, then it's a no brainer and it's super easy. In other cases, the conversation's over almost as soon as it starts because they're all they're looking for is price. And in that case, I'd say, you know, it doesn't seem like we're, we're a good fit and we move on. It's very easy. So I think the hardest part is just sorting through finding the people that are interested in coverage and
00:17:26
Speaker
And for what works very well for me is telling stories and asking very pointed questions. So I'll say if you're showing a house and somebody slips and falls on the stairs and says it's your fault as a real estate professional, would you want coverage for that? Or last week I had a, you know, a client that had this claim where, you know, one of their clients wired $50,000 and it was to a hacker. What would you do if that happens?
00:17:57
Speaker
And a lot of what I do, I actually show them their policy. When we go through our Google meeting, I will highlight their actual policy or a sample policy that I already have on file and show them in the policy language. And even though it's a little bit boring, a lot of brokers would want to see that for the ones that are interested. Seeing that you have actually read page 35 of their policy, page 85 of their policy, have taken the time to highlight something.
00:18:27
Speaker
Um, they appreciate that and they get that, Hey, this is different than anything else we've ever, we've ever had before. Yeah. So I think we'll just have to find the right person. Yeah. And it's almost like they, they self-select if they're, if they're willing to go through the thoroughness that, that you hold yourself to, then most likely they would be a pretty sticky and, and just profitable client long-term.
00:18:57
Speaker
Yeah, one of the things, a couple things that we think about that is what if we sell on price, we're going to lose on price. And so the clients where I sell on coverage, because if they bring me another quote and think it's better, I can show them why it's not. In almost all cases, then we will win on coverage over notes. And so that's a huge draw.
00:19:24
Speaker
but also in a industry where, like real estate, where they have to be paying attention to contracts and details, and I'm selling a policy that will cover them if they don't, we like to see someone that is actually interested in what their coverage is, interested in detail. If they're completely risk-averse and don't care, then for me, that's red flags. And so we like people that are interested in coverage. We see that as a checkbox in the underwriting process.
00:19:54
Speaker
Yeah. Yeah. I mean, it kind of ties into what I remember the first time looking at your LinkedIn profile.
Balancing Music and Insurance
00:20:02
Speaker
I think I, I think it was because of the protege. I was, I was looking up all the, the, the participants and then I went to your skills section and there was a one for reform theology. And I was like, I gotta, I gotta become friends with this guy. Like that's incredible. Um, and it's my, my dad's a pastor and he, he always tells me,
00:20:25
Speaker
You know, we can compromise on the way that we portray ourselves or the way that we run our services to attract people, but ultimately what gets them there is what's going to keep them there. So if it's flashy, flashiness and materialistic things that you're going to have to continue to do that to attract them.
00:20:50
Speaker
Whereas, if it's sound preaching and biblical preaching and discipleship and all the things that actually matter that get them there, then there's a huge self-selection process. So it's interesting how that also applies to the real estate E&O world. Yeah, it's a good analogy.
00:21:12
Speaker
Yeah. So, you know, kind of take us through, I feel like we may have missed a little bit of your upbringing. You're not just a real estate, you know, legend. You are also pretty skilled at some other things. Take us through that. You might know what I'm getting at, but I hope you touch on it. Yeah. So, I was homeschooled until college. So,
00:21:41
Speaker
It was a fantastic experience. I've got four siblings who are also homeschooled. And we were very involved in music. So I was in a shrink quartet with my siblings. And that was a huge part of my life. It still is, to a large extent, but especially before I got married and spending a lot of time here at work. But before that, I would
00:22:11
Speaker
I was in a string quartet with my siblings, string quartet at our local university, actually in a quartet with my soon-to-be wife at the time, and in all the local symphonies and the orchestra that our university had.
00:22:35
Speaker
you know, taking lessons with college professors. And so that was a huge part of my life. So when I was 15, 16, 17.
00:22:45
Speaker
doing high pressure national competitions, but then also just performing a whole bunch. So it was a very fun experience, a good experience. I got to interact with a lot of adults at a younger age. So when I was 16, I was in the professional local symphony and they had a very, very high standard as far as
00:23:08
Speaker
you know, when you show up and how you interact and, you know, you're doing that at a high level. So, I think it was a very, a good experience that helped me, helped give me the tools to be able to excel whenever I was doing and just be able to focus in on it even when it got hard. And I think without that, I probably wouldn't have stuck with one niche for two years even when
00:23:38
Speaker
you know, some, some months for just not very good sales wise, just because I was having to turn down short term deals. Yeah. And I feel like I may have been part of the problem there. Sometimes I remember when I had started the retail agency, cover your SaaS and we'd both taken this approach. I remember I'd just like hear things in the industry and I'd be like,
00:24:05
Speaker
dude, you got to write this or you got to go after this. And you're like, no, I'm staying the course.
Specializing in Agency Technology
00:24:11
Speaker
And yeah, ultimately, that's what pays off. So well, then a large portion of what I do in the office beyond sales is also the helping with the technology for our agency. So I'm our, you know, Salesforce admin for CRM. So I do have a
00:24:31
Speaker
between five and 15 hours of that each week for the agency. And so there's a lot of other things vying for time here, even at work. There was a position that came up for commercial renewal just for our normal general commercial book of business last year. And that was a big
00:24:55
Speaker
to just go into the study paycheck instead of the more commission-based role. I saw the future where it's going to go in the next few years if I stick with it. It's been tough in some ways.
00:25:14
Speaker
I can really see how having one client base where you can quickly become the expert makes things just so smooth, even renewals. I sit down with the renewal meeting. I know exactly what we're going to talk about. The process is the same as the renewal meeting I had yesterday and for that. I just like that consistency and being the expert and knowing what's going on. I think you can do that as a generalist.
00:25:43
Speaker
It's much easier, especially as a young.
00:25:47
Speaker
Yeah, yeah because I think the same thing, you know, I was talking to somebody today and they They were asking me about it was a question about work comp and then another person asked me a question about D&L and I'm just like I don't know how generalists do this like how how how do you have an answer or response to all of these different, you know, very detailed questions and
00:26:15
Speaker
Not even like within the same the same and it's it's it's even difficult to really like understand to a really high degree the individual policies within an industry much less all industries and all policies it just seems like an impossible task that would probably take decades to Yeah the
00:26:36
Speaker
the broker that I work with on the Real Estate E&O, he's been doing this for 25 years, just Real Estate E&O. And if I asked him a question about GL, he'll say, I specialize in Real Estate E&O and cyber. So you have talked to a guy in my agency who specializes in Real Estate GL. So that level of
00:27:01
Speaker
just expertise it saves you time because when I've stepped outside of that just having to go through and because we do as an agency we do answer questions at a very high level and we do a fantastic job and so what that means is you have to spend a whole lot more time you know digging through the questions and answers and trying to answer those
00:27:25
Speaker
when you don't necessarily know upfront. So that specializing does save time. But in our agency, we have found a good balance between finding individual roles in the agency where we have a person that specializes in life and health. We have a person that specializes in commercial renewals.
00:27:41
Speaker
you know, so we do have it a generalist specialization we'll call it. Yeah. Yeah. No, that's awesome. That's awesome. So kind of switching subjects to something cyber related.
Convincing Clients on Cyber Insurance
00:27:59
Speaker
Yes. I saw a post recently is actually from our, our first podcast guest, Mercy Komar. She, she put a post out that, um,
00:28:10
Speaker
and feel free to disagree with this statement, but she said she was just confused as to why it can be difficult to show or explain or I don't necessarily like this word, but convince
00:28:29
Speaker
professional service providers of their need for a cyber risk management solution that would include cyber insurance. From your perspective, dealing exclusively with professional service providers being real estate brokerages, has your experience been similar or has the adoption pickup rate been pretty solid with not a lot of pushback?
00:28:58
Speaker
I 100% agree with what she had said about that. With E&O, everybody has it in many states required. It's carbon-made franchises. Everybody realizes, if I make a mistake on this transaction, I'm going to get sued for it. I think it's a very easy conversation to have. I've only met a handful of real estate agencies that don't have real estate E&O. With cyber,
00:29:27
Speaker
most of them don't have it and most of them don't understand why they wouldn't eat it. So typically the conversation would go like this. I would typically bring up the what we see as the number one claim and that's third-party wire fraud. So that's where our front transfer liability is another term for that the coalition is using now but essentially where
00:29:51
Speaker
Your email is breached as a real estate professional, and hackers send wiring instructions to your clients, posing as you, and your clients wire money to the hacker, and everything goes wrong from there. And that's happened to several of my clients, even with, somewhat at this point, a smaller book of business.
00:30:17
Speaker
where my clients' clients have lost tens of thousands and hundreds of thousands of dollars, and there's no getting it back. So that's where I typically point out, and immediately the objection is, well, we aren't involved in wearing them.
00:30:36
Speaker
So there's immediately no understanding of the liability piece, of business email compromise, and it's a huge hurdle to overcome. You have to very carefully explain the scenarios, explain, okay, this is how you could be liable for this data breach because real estate agents in particular are easy to think that's all in the title company.
00:31:02
Speaker
And in many cases it is, and I think tile companies have a much better understanding of their cyber risk because they're constantly wiring money involved in that. But for the real estate piece, it's very, very difficult. The other common misconception I get is what we use
00:31:19
Speaker
We don't have any software that's developed by us. All we use is third-party systems like a Salesforce or Dropbox and thinking that the liability that is all on Salesforce or Dropbox. So that's a, just in a nutshell, the types of responses that I get. So it's very difficult. It's also difficult to add another
00:31:44
Speaker
In most cases, adding another budget line item to the budget. So one of the things that I'm focusing on right now, which is talking about percentage of revenue instead of an extra $2,000, $3,000, $5,000, $10,000 is talking about your overall percentage of revenue, what you're spending to protect that revenue. And typically it's under 1% for a lot of my clients. So I just quoted cyber for somebody that was
00:32:15
Speaker
a fraction of a fraction of a percent of their total revenue. And yet that's an extra $2,000 that they weren't spending last year and that concerns them and they think, why do I need this again? So it's a constant process. A lot of what I do is just continually bringing it up. And I think that works. We had clients that we brought it up every year
00:32:43
Speaker
you need cyber insurance and they weren't getting it until finally one year, they just said, yeah, you know, you've been talking about this for years, we'll go ahead and get it. And since then we've had two cyber incidents in one year. So for me, it's just continually just educating, bringing up a renewal, bringing up stories that we've had from our clients and just trying to dispel those myths.
00:33:12
Speaker
Yeah, it's interesting because we were just in the home buying process and my realtor and my lender both specifically warned me
00:33:29
Speaker
and it was in their email signature as well of wire transfer fraud and being on the rise.
Wire Fraud and Cybersecurity Challenges
00:33:37
Speaker
So I'm hoping that as it becomes more, as these real estate brokers become more and more aware of the frequency that this is happening, I mean, funds transfer fraud, business email compromise, most frequent claims that we see in cyber, right?
00:33:56
Speaker
And if you think about it from a necessarily a business perspective, but on a personal perspective, the largest amount of money that you're ever probably going to wire or transfer is going to be
00:34:11
Speaker
a part of the home buying process. I'm hoping that more and more people will pick up on this just because I feel like, you know, the exposure now is, you know, it might not be as large as their, you know, exposure, but I would anticipate over the coming years, it'd probably be coming close to, yeah. Yeah. And I think that,
00:34:40
Speaker
I see a lot of what you were saying about warning clients. I think that's very standard in the industry right now. The National Association of Realtors has really pushed that. Warnings and email signatures is very common. Even a page in the contract that you will sign that says, we understand I will never wire money. That's very common to see.
00:35:07
Speaker
When I put an offer in a house, I used a client of mine, a real estate agent, and we hadn't discussed that at that point, putting that in the contract, but they'd already had that in there already. And I think that the danger of doing that is they think, all right, I'm covered. I'm good to go. I warned my client. It's a serious issue. Yes, we don't want to deal with that situation, but we don't need to spend $1,000, $2,000,
00:35:33
Speaker
whatever it is to purchase insurance for. And that's where the shuttle comes in and it's, yes, you can tell your client, you can put it in the email signature and you can have it in the contract, but my client recently that had all those things, they still wired money the wrong place. So, you know, that's the difficult part to get across. The recent example that I had a couple of weeks ago, it's still fresh on my mind is where
00:36:03
Speaker
It's still a little bit up in the air about who's liable, and the client's client is getting an attorney to figure that out. So the hardest part about that situation is they called to verify the wiring instructions with the title company. But they verified the email that the title company sent, not the second email that was sent after by the hacker.
00:36:30
Speaker
and they brought the second email to the bank is my understanding. So there's so much complexity here. You're dealing with people who have never done this before in their lives. Even I recently was signing contracts, putting offers on houses. It's the first time I've ever done this in my life. And I sell to real estate professionals, E&O, for a living. And there's still times where
00:36:56
Speaker
You're just put, you have a form put in front of you and you think you know what it means and you do your best to understand it. So that's, it's very tricky just because you have something in your email signature doesn't mean that, or you tell your client doesn't mean everything's gonna be fine. I think that's what we need to get across. The other two things I wanna mention on this,
00:37:21
Speaker
One is that when you start talking about two-factor authentication, MFA, with real estate, the difficulty you run across is technically they're independent contractors. And so if you're dealing with a 100 agent firm, you're not dealing with the company with the 100 employees, you're dealing with the company with the higher independent contractors.
00:37:43
Speaker
And a lot of companies are very self-consciously pushing. Everyone has their own independent business here, even though technically,
00:37:53
Speaker
I mean, technically they're independent contractors. Technically, they're also under the oversight of the broker. And so that's very difficult when you have to then implement MFA as a company policy when so-and-so has their Hotmail account, so-and-so has their AOL account, and so-and-so has their personal Gmail account. And they're all independent contractors hanging their license under your firm. So that's a huge hurdle
00:38:21
Speaker
to overcome. And then the other thing that I'm seeing a lot now is a writer on a professional liability policy for cyber. One of the major E&O programs out there for real estate has a pretty decent endorsement.
00:38:40
Speaker
And I think that's a lot easier of a sale. And I'd rather they have that than nothing. But typically, those are heavily limited. $100,000 is pretty standard limit. And you'll see a lot of $5,000, $10,000, $50,000 supplements on there. So oftentimes, a $100,000 standalone policy
00:39:07
Speaker
is the same price, but at least they don't have all the sub-limits that the endorsement has. Or even sometimes a $500,000 standalone policy, which is better coverage, is the same price as that professional liability endorsement. So there's one company out there that has a flat rate cyber endorsement, 600 bucks, regardless of whether you have a $1 million revenue firm or $150 million.
00:39:36
Speaker
And I don't know how they're doing that, how they're still in business on that, but that's their model. And so if you have an option between it,
00:39:50
Speaker
If you're a $100 million company and you have a $600 policy or a $60,000 policy, that's a very difficult sell at that point. But I don't expect that endorsement to be around for too long, the way that they're doing it. I think there has to be some sort of underwriting at some point. But currently, that's my understanding of the way they have a structure.
00:40:13
Speaker
I feel like somebody might've just forgotten. And then some manager director's gonna be like, we didn't change this? This is not the way we do cyber, this isn't 2013 anymore. No, it's definitely an interesting position in terms of cyber, just because there's large transaction sizes, yet you're not dealing with
00:40:43
Speaker
buttoned up companies that have robust cybersecurity programs. You're dealing with just normal regular people and even myself. I don't have something like Mimecast on my personal email to be able to maybe filter out some of the phishing emails, even though Google does a decent job out of the box.
00:41:10
Speaker
And then on top of that you have the the personal emails from the real estate agents and you're very limited to what you can do from a like Implementation standpoint because they're all independent accounts It's a tough spot. It's a tough spot and You know you there's there's an independence aspect, but then there's also like a
00:41:37
Speaker
With the new safeguard rule that professional service providers are technically required to comply with from the FTC,
00:41:50
Speaker
It'll be interesting if we ever see any sort of penalties assessed on any real estate brokerages for not complying with some of those critical controls. I don't know if you have any insight or have heard of that happening before, but yeah. Oh, I've looked into that actually after you mentioned that, and I don't know if real estate agents and brokers are necessarily on that list. I think title might be, I need to look into that more.
00:42:17
Speaker
hasn't come up at all with clients, but going along with what you just said about that.
00:42:25
Speaker
A lot of these agencies are, you know, either very broad and everybody has their own policies and personal emails and never just texting on her iPhone with clients or I just had one yesterday. She's going off on her own and she is a very high producing agent. She's, you know, creating her own company, but I, you know, did 12 deals last year.
00:42:50
Speaker
all of that million dollars and one of them was 1.6 million dollar house and you know wire transfers are all you know five six figures and
00:43:03
Speaker
there's no, I mean, it's her and her, you know, house doing these transactions with the gene log count. So that's the type of thing that we're dealing with. And even though a lot of that risk is on the title company and typically in title companies, I look more structured like a normal, you know, corporate setting with controls and employees. It's still a very, there's regulation, but it's,
00:43:34
Speaker
there's a lot of personal preference in the real estate world right now. Yeah. Well, if you're, if you're an attacker, a cyber criminal, listening to this, don't get any ideas. This is actually all fake real estate. The real estate industry is incredibly buttoned up and you should go after another
Cyber Insurance in Real Estate Franchises
00:43:52
Speaker
industry. Um, I don't want it to be too doom and gloom. Um, I mean, there, there are,
00:43:58
Speaker
a number of agencies that I've talked to that are taking this very seriously and the real estate franchises are being taken very seriously. So to all the hackers out there, a number of the well-known real estate franchises that we would all know are actually requiring that their franchisees purchase cyber insurance. And so that's sort of the direction I see it going.
00:44:25
Speaker
with a lot of them requiring certain limits 500,000 is one limit I'm seeing. So that's pushing a lot of these agency owners who
00:44:36
Speaker
like their franchise, and just like they've had to purchase E&O for the past 20 years because it's required and they know something they need, now they're starting to see cyber that way. So it's going that direction. But as someone who has a book of business that's current with whatever the market is right now, you have to do a lot of work inside your book of business to help people
00:45:00
Speaker
understand the risks and you know, that's my job.
Role in Client Education and Expertise
00:45:03
Speaker
So I shouldn't complain about because, um, yeah, that's, that's what, that's what we're here for. Yeah. Well, that's a fantastic attitude. Um, I wish I had a little bit more of that. I tend to, I tend to be the guy that's like, that will complain about it, but not do anything about it, um, for, for something. So, um, that's a good, good attitude to have about it. So, um, just kind of wrapping things up here, uh,
00:45:29
Speaker
I would imagine that most people that listen to this would be interested in connecting with you, whether that be through LinkedIn or setting up a quick call just to chit chat, talk shop. What's the best way to get in touch with you? Where can people learn about Firmsecured, Veritas? Give us all the directions.
00:45:54
Speaker
Yeah. So, Jonathan Lugo on LinkedIn is, you can find me there, connect. I'll connect with pretty much anyone, except for people I think are going to be hackers. So, just send me a message and we'll connect and we can chat from there. That's how we met, just through LinkedIn Messenger. And so, I'm very open to connecting with anyone out there. And that's how I've fallen into the real estate, Ian Donedge. That's how I met you.
00:46:24
Speaker
So I'm very, very open to that. Firmsecured.com is our site. If you want to see what we're doing, we're putting out blogs on there on professional liability and cyber, trying to educate there. I also put out some content on LinkedIn, hopefully more regularly, but pretty regularly right now.
00:46:45
Speaker
just trying to get the word out. I'm happy to connect with anyone doing cyber. It's something that I honestly need to research and do more work on just so I can, once again, try to be the expert on those coverages. I've got a book you had recommended here on my desk that I'm going to be digging into it and reading and really focusing on the cyber.
00:47:14
Speaker
For me, I don't lead with cyber just because of the way the industry that I'm in, but for those that are in cyber very open to connecting, there's a lot of work to be done.
00:47:27
Speaker
Love it, love it. Go, yeah, go read anything that Jonathan posts on LinkedIn. I love the, uh, some of the blogs that he puts out about, you know, how much does enter X insurance product cost? Uh, because unlike everybody else, it's just using chat GPT or Jasper or something to create some sort of article that like you read it and then you get to the bottom and it just says it depends.
00:47:54
Speaker
Jonathan actually tells you, Jonathan tells you like, hey, for, you know, from this size, you can expect, you know, x for x limits. So, well, that's one of the nice things about specializing is you can get to the point where you can ask three or four questions and say, yep, here's your ballpark on pricing. So that's one of the nice, one of the nice things is,
00:48:18
Speaker
If you know your revenue and you know some other things and you know the industry, then it's very easy to do that, but appreciate that. Yeah. Love it. Love it. Perfect. Go connect with Jonathan. I'll put all that stuff in the show notes for your liking. Man, appreciate you coming on. Super excited about
00:48:43
Speaker
what you're doing currently and the plans that you have and just the market that you're operating in and spreading the good news and really helping people. If you're a real estate broker and you're not working with Jonathan,
00:49:00
Speaker
I don't know what you're doing. I'm going to be sending this podcast to my agent and everyone that I know in the real estate game because they need to be working with Jonathan. I appreciate it. I want to say some good things about you because you've been very helpful as I am going through this process of
00:49:21
Speaker
you know, cross-selling, upselling cyber to a lot of my clients who are just Model Line, E&O, or just E&O and GL. And so APES done a fantastic job of just helping with that process, helping make sure the coverages are right, going through all the hoops that need to be jumped through in order to make that happen, even when it's a very, very small account.
00:49:47
Speaker
I have a lot of small mom and pop agencies. And you've been fantastic with helping with that. And in addition to, I know what you're doing in the middle market and some of the larger accounts. So I appreciate that a lot. Thanks for having me on.
00:50:05
Speaker
No, I appreciate that. And I'll, I'll Venmo you that a hundred dollars. I paid you to say that. So no, I think thanks for him for coming on. I'm looking forward to catching up soon and keep doing the good work. Thanks.