On top of selling insurance, brokers are also tasked with managing client relationships. But what happens when a client doesn’t mesh with their broker?
“Sometimes it just doesn’t work out,” says Jack Mazakian, vice president of Advocis Broker Services. “You’re definitely capable of saying to a client, ‘We cannot serve you anymore,’ for whatever reason. [It could be that] they’re either too big or too complex, or they are putting us in an awkward position.”
If a client demands a broker do something that isn’t right, proper or feasible, Mazakian says it’s okay to walk away. “Because if that client is taking you down a path you shouldn’t put yourself on…ultimately, you can create liability in your own practice as a result of it.”
The question arises in several contexts. For example, in the hard market, rising insurance premiums may cause friction between brokers and their clients. And in the world of auto insurance, where insurance is a mandatory, the industry is under an obligation to “take all comers.”
But sometimes clients may not get along with their brokers. Before dropping a client, Mazakian says brokers will look for other ways to serve them.
As the principal broker, Mazakian says he mediates these issues when they arise. “I’ve been in situations where clients call me and say, ‘You know what? I’ve been dealing with your broker, I hate them.’”
He says it may be a difference in personalities.
“It’s a hard discussion,” he says. “Do we try to hire someone that that can better serve that person? Or is it just a lost cause that we just can’t, no matter what we do, satisfy the unique approach that this person has taken?”
When a broker does end a relationship with a client, they must provide the new broker with a letter giving them stewardship of the client.
“If we are severing the relationship, then what transpires is, the new broker that wins that client will be given a broker record letter,” he says. “It’s a formal letter that is, to some degree, standardized. The letter moves the responsibility of the insurance program and insurance policies to the new broker.”
Timing also matters: If a policy has just been renewed or premiums have just been paid, then those things need to be considered before severing the relationship.
It’s expensive to win and maintain a client, and it hurts to lose them, but Mazakian says the broker-client relationship is about more than just revenue.
“We’re trying to provide a service, but it also is relationship,” Mazakian says. “The better the relationship with our clients, the better we can serve them, because we get to understand them.”
However, the broker-client relationship needs to be mutual.
“Sometimes they just don’t want to talk about what they do, and you go, ‘Okay, but we really need to know intimately what’s going on,’ and they won’t share that. And then you’re put in a difficult position that you can’t really serve them well,” Mazakian says.
“We spend a lot of time learning products. But at the same time, if we don’t take the time to understand who our clients are, then we can’t really deliver and we can’t properly advocate.”