Brokers need to take a segmented, customized approach to advising on commercial risks of all sizes in the future, according to Dave De Kuyper, executive vice president of Market Management at Northbridge Insurance.
All commercial clients, regardless of their operational size or complexity of risk, increasingly expect insurance companies and brokers to provide specific advice to clients about risk management within industry segments and sub-segments, De Kuyper told Insurance Business.
“Right now, it’s too general,” he said. “Most companies have developed a manufacturer’s wording, but not all manufacturing risks present the same exposures, which increases the need to understand and manage risk.
“If you have a customer who is manufacturing critical car parts, they may be getting component parts from overseas that require parts to be within a millimetre of specs to which they have to deliver. That’s different from a client who is growing and processing food products in Canada.
"It's not always about whether the policy will respond. It's about managing and mitigating the risk and avoiding a loss in the first place."
Ninety-five per cent of enterprises generate less than $5 million in revenue, according to Statistics Canada. The majority of brokers’ relationships will therefore occur with smaller commercial clients. These clients may not have the resources for a dedicated risk manager, but they may still have similar expectations to larger customers.
How do you give these clients specific, relevant information?
Newsletters and company websites are obvious examples. "An emerging opportunity is in social media, where you can provide risk insights within specific buying groups,” De Kuyper said. “It's not only important to manage the existing exposures, but also to be able to identify emerging risks.”
Specific business segments to target will depend on the broker and the company, and what types of specific expertise they have. If the broker does not have the expertise to provide information on a specific customer segment, he or she can certainly work with a carrier that does.
“Whether that advice is on a pay per use basis or it‘s free advice will depend on the broker and company,” said De Kuyper. “But at least it gives customers that can’t afford a risk manager the knowledge to manage their risk and have better control over their total cost of insurance.”