10 things insurers can do to help their brokers

10 things insurers can do to help their brokers

10 things insurers can do to help their brokers

An insurance industry executive with experience on both sides of the fence offers 10 suggestions to help promote healthier relationships between insurers and brokers. Do you agree with the points made?

The author of the article, Dave Thomas, a senior executive with several property and casualty insurance organisations in the United States, recently moved to the brokerage side. His points have relevance to the Australian market too.

Based on his observations, Thomas offered the following 10 tips to insurers that would help them to improve their relationships with the broker distribution channel:   

Hands-on underwriting help
Don’t send in marketing reps that waste the brokerage’s time. The insurer should send a representative who is “fully prepared to look at our new business prospects and upcoming renewals and engage in underwriting and quoting while in our office—or make a commitment to do so in the upcoming days and weeks,” Thomas writes.

What classes do you write, really?
Insurer need to say what they do, and do what they say. “Companies will provide their agents a list of classes of business in which they consider themselves players — and want to encourage the agency to submit risks in those classes,” Thomas writes. “But when the agency does so, it learns that the carrier really only writes risks meeting other unpublished criteria or prices these risks so uncompetitively that the business is not marketable.”

Don’t silo communications with brokerages
Thomas said he understands the need for insurers to silo personal and commercial lines internally. “However, I do not see the need to have two marketing reps calling on the agency,” he wrote. “Nor is it acceptable to separate personal-lines from commercial-lines production for the sake of profit-sharing eligibility.”

Profit-sharing updates
If insurers want brokerages to encourage particular results through profit-sharing agreements, the insurers need to provide brokerages with regular profit-sharing updates throughout the year.

Avoid “share shifting”
Cease or curb the relatively infrequent activity of “share shifting,” in which insurers seek to grow their books with brokers by encouraging agency principals to move existing books from other insurers with accompanying commission-rate enhancements. “However, they fail to realise or choose to ignore the fact that the agency’s primary objectives are to grow its book of business by high retention rates and a steady stream of new accounts — and to move existing business from one carrier to another only when it is in the best interest of its client,” Thomas writes.
 

Please see ‘Respecting broker autonomy’ on Page 2...

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9 Comments
  • Dean McCauley 17/01/2013 12:39:06 PM
    Very sound advice and is very relevant in today’s Australian General Insurance Market. The question is, are insurers listening or even prepared to or are they just going to remain in their ivory towers? I can vouch that Points 1 and 10 are very relevant in respect to our main carrier and Point 2 in respect to our minor carrier. I had a good laugh at Point 8 as well. Does anyone remember those Suncorp adds soon after the Qld floods where they were advertising that their private motor policy covers flood! Well derr, all motor policies cover for flood and have done so for a very long time.
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  • Paul Murphy 17/01/2013 1:01:34 PM
    There are quite a few areas that are common to Australia and the US. Every insurer offers "vanilla" lists of preferred occupations via technology platforms. Surprisingly most favour the same risk appetites. Who'd of thought it?!?! The Australian market is made up of clones who lack imagination, initiative and genuine underwriting skills.( With some notable and honourable exceptions). No wonder so much business goes to Lloyd's both local cover holders and direct into London. At least there you can have a conversation and get intelligent responses and innovative solutions for clients. The rise of technology platforms, the dumbing down of staff who lack genuine skills training and the rise of direct insurers dictating to the their commercial cousins in the same fold, mean things are only likely to get more restrictive. However as ever brokers serving the middle market will find new ways to beat the challenges and outwit "the rise of the machines".
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  • Dean McCauley 17/01/2013 1:45:45 PM
    Well said Paul and I agree. I can only hope that insurers realise that computer systems no matter how good they are can only do so much and nothing will replace the expertise of a traditionally trained and experienced underwriter, of which appear to be a dying breed these days. I remember the days as a former underwriter of not only being able to make sound decisions based on parameters given with reasonable discretion but that it was expected of you. Now if you give them a square peg for a round hole it has to be referred to the State Underwriting Manager or National Product Manager! Serioulsy!! Hopefully, we will see traditional underwriters again before that experience pool has disappeared for ever.
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