How to read your clients' business plans
Kyle Nichols and Jeffrey Charles of Jones Brown Insurance Brokers + Consultants discuss what kinds of things they can find in their clients' business plans.
Video transcript below:
David Gambrill, Insurance Business TV
David Gambrill: Professional [calls] across the country require the brokers to know their clients and what better way to know your client’s commercial risks than to look at their business plan. A blue print for current and future insurance needs. I am David Gambrill, welcome to Insurance Business TV.
The business plan gives a broker a good idea of the client’s critical operations and the clients at peril that can put these operations at risk. This gives the broker a chance to sort out which risks can be covered by an insurance program.
Kyle Nichols, Partner, Jones Brown Insurance Brokers & Consultants
Kyle Nichols: Outside of the usual risk units of property values and sales revenues and things like that, we also look for how the company is structured. If it’s a partnership versus a corporation because they need to protect the human capital assets a bit differently in each case. So for example, a partnership might be concerned what happens if there is injury or a death of one of the partners and how does that business carry on and that’s true to life insurance too. In a corporation, the corporation will always evolve and carry on with different leaders, but those leaders need to concern themselves with the risks of guiding that company which is Directors and officers liability. So as a broker we have to understand how it’s structured now and in the future and make sure the insurance markets understand where they are now and where they are going to grow.
David Gambrill: Knowing a client’s key suppliers and customers helps a broker to advise how to manage supply chain risks, trade credit risks and contingent risks.
Jeffrey Charles, Jones Brown Insurance Brokers & Consultants
Jeffrey Charles: Yeah it’s really important for a broker to understand who his customer’s clients and suppliers are and when we do that, it helps us understand the future context of the business. So certain customers today may not be the customers of the future. An example a plastics manufacturer may be selling into the packaging industry and tomorrow they are looking to go into healthcare or the life science business. And as a result we need to match the insurance carrier or the insurance marketplace with that future risk, in addition to being able to manage what’s happening today in the business. So understanding who they are buying from and who they are selling to, is critical for us in helping select the right insurance capital and I think the same thing applies as it relates to new product expansion and or geographical expansion. So going over borders into places where you haven’t traditionally done business presents new risks and we need to make sure that our clients insurance companies and partners are understanding and aware and involved willingly in taking on those risks.
David Gambrill: It takes more than a casual glance at a business to figure out its risks. If a broker looks at a business plan, they can catalogue risks both current and future in order to give the most comprehensive advice. I am David Gambrill, thank you for watching Insurance Business TV.