Inside the broker beauty contest

Inside the broker beauty contest | Insurance Business

Inside the broker beauty contest
12,000 employees, over US$2bn in revenue and one of the US’s largest private companies. Cook Group is the world’s largest medical device manufacturer, and over her 34-year tenure, insurance director Nada Jandrich has used almost all the big brokerages to manage that multitude of policies. Safe to say she knows a thing or two about how to choose the right ones.

Cook Medical’s insurance program is all curated by Jandrich. Each renewal season, brokers line up to woo Jandrich into choosing them to be a part of the team.

For Jandrich, the broker beauty contest usually goes something like this:

Most of Cook Medical’s policies are renewed on an annual basis. At that time, a pair of brokers from several brokerages will come to her and make a pitch. In an hour-long meeting, the brokers will go through brochures, show a PowerPoint, and lay out their proposal. During this stage, Jandrich hears anywhere between six and 10 proposals before narrowing the field down to two. At that point, the brokers make their pitch directly to the C-suite and hope for the win. “The best prepared broker is one who knows our business, our pressure points and comes prepared with solutions,” she says.

Pricing can vary greatly from one brokerage to the next. “We definitely consider [price],” says Jandrich. “It’s something that we negotiate with our brokers and we help drive the price down. If you want to continue doing business with us, you have to work with us on that.” The two things Jandrich always negotiates on are premiums and scope of coverage. “We negotiate that and usually lock [a price] in and then when that period’s up we’ll renegotiate.”

Jandrich uses different brokerages for each region in which her company does business. In Europe, she currently uses Marsh, in Asia-Pacific Willis Towers Watson. In the US, where Cook Medical is based, she prefers to use a regional broker, which is unusual for a company of its size. “I like to use a regional broker because we are like a big fish in a small pond and I get a lot of attention and a lot of good customer service,” says Jandrich. “We used to use one of the top three brokerage firms here in the US, and what I found with a bigger group is that the personnel were changing and there was a lot of miscommunication and things were taking longer to get done." Now, her local broker is Hylant Group, a family-owned business that has offices in Bloomington, where Jandrich is based. That’s important, since she likes to be in close communication with her brokers, often contacting them daily.

Relationships and personalities play a huge factor in the decision-making process, but it can be hard, or even impossible, for risk managers to make solid judgements based solely on the hour-long pitch meeting. “I think you would probably have to roll the dice or go with your gut instinct,” she says. “In our case with our regional broker, they had been involved in our account years and years ago, so they already had their foot in the door once. We knew a little bit about them, so they weren’t the great unknown.”

The beauty contest doesn’t end with the C-Suite’s decision, either. Jandrich has seen relationships shift and change for better and for worse throughout a policy period, which could have ramifications come renewal season. “As we’ve grown, the brokerages [we use] have also grown quite a bit, and sometimes they’ll pull somebody onto our account that may not be a good fit,” she says.
“I work to get the right people and make sure we have the right team, so there have been a couple of times when people have gotten the boot because they weren’t right for us.”

At the end of the day, putting the right team of brokers together requires constant adjusting. “A lot of it is trial and error,” says Jandrich.

When working with brokers, Jandrich prefers to pay by commission rather than fee. “We did fee-based years ago, and we found we were getting nickel-and-dimed to death every time we wanted to request a certificate,” says Jandrich. “We work our brokers really hard, and I would hate if they would nickel-and-dime me every time I call them, so commission is best for our type of business.”

A big part of the work that Jandrich asks her brokers to do involves staying on top of risks and developments that could affect her business.

“Laws change, regulations change, taxes change,” she says. “I find that when I go through a renewal period, whatever I needed to know one year, I need to know something different the next. There are a lot of different changing risks all the time, so I need a brokerage firm that has access to the world.”

Some brokers are better at providing that expertise than others. “The larger brokers probably have more overall knowledge, but you just have to be able to access the markets,” says Jandrich. “Even though I use a regional broker, they’re connected to a worldwide brokerage network and so if they don’t know the answer, they can reach out.”

Over the years, Jandrich has fine-tuned her team of brokers into a well-oiled machine. She still judges the beauty contest every year, but with time and experience, she’s figured out what traits are best suited to Cook Group.