May 17, 2017 by Martha Porado
Sometimes, becoming the big fish means choosing the right pond. But how? Not every broker can ascend to an executive at a multinational firm.
So where is your cozy segment of the market which will yield the type and amount of business that will help you maintain a secure and enjoyable career?
Thomas Accardo, co-founder, BrokerLift Inc., suggests the way forward may be “to be known for… fewer things, but to do those things for a much broader marketplace.”
Take retirees moving from larger cities to more rural areas, for example, who are spreading out and creating “the garden of their dreams,” like a small hobby farm. Presto! They have a new and specific insurance requirement: utility tractors. Sure, a brokerage can provide this specialized insurance product for them, at a cost of around $150 per year, and it’s a good way to get new customers in the door. But brokers can also achieve growth by becoming a leader in providing for a previously unmet need, and growing geographically.
“Low-premium products just don’t make sense for larger brokers,” Accardo says. “They are extremely difficult for brokers to distribute; the economics just don’t make sense. We want to support brokers to be able to go out and exploit niches, regardless of premium, or product. We provide brokers with an ecommerce platform to support [products with] low premium or high internal administrative costs.”
Accardo is trying to show brokers what these veterans of the industry have known for decades: “find something you’re good at – a corner of the market that excites you – and go whole hog.”
But just how do you get there? We spoke to three brokers who have carved out a niche market strategy on becoming specialists in a market that’s more competitive and challenging than ever before…
Rich People and Their Kids
Diane Ram, senior vice-president at HUB International Ltd, knows her clients: high net worth individuals, usually paying $5000 or more in premiums. “I’ve been with HUB for 28 years now and I’ve seen my clients’ children grow up to become my clients,” she says.
Communications in this area require detailed consideration. “There are a lot more touchpoints throughout the year than you’d think, says Ram.” Those touchpoints go beyond frequent phone calls.
“When there’s an accident, or a house-related claim, my clients know I’ll be right over to be there with them,” she says. “Adjusters that cater to high net worth clients know these people have valuable assets, but I want to ensure that the process goes smoothly.”
This mingling of social and business considerations within the relationship functions on many levels, not only in times of stress, she adds. It’s all about showing concern for the client as well as their family. “We might invite clients to a game where we have the box, or send you something if you’ve had a baby, or someone’s passed away. They appreciate that you remember these things and are thoughtful enough to ask,” she says.
We can insure multi-milliondollar pieces of jewelry, art, properties outside of Canada, wine collections. They’ve even got airplanes. We can do it all.”
With these individuals, insurance plays a significant role in preserving capital through the generations.
“In wealthy families, you start with the parents. Then, when the children are going off on their own, parents are organizing the insurance for them. We make sure that the liabilities are looked after properly and the children have the right policies. We don’t go out looking, our business is all by referral,” she adds.
Ram says you develop expertise through osmosis. “I started as an underwriter. A broker I’d worked with thought I was aggressive and wanted me on his team. We had some somewhat wealthy clients and it grew from there.”
Sometimes she thinks she’s “seen it all,” but “now and then somebody will ask me a question and I won’t have had that [request] before.” Fostering a robust relationship with underwriters is key, in order to accomplish special requests.
“We can insure multi-million-dollar pieces of jewelry, art, properties outside of Canada, wine collections,” says Ram. “They’ve even got airplanes. We can do it all.”
Often she helps insure expensive parties, too. “It’s more for the guests. If they go to that lavish wedding, and drink too much and fall down the stairs, that’s a liability issue. I’ve worked on putting together insurance for a client’s wedding venue in New York City. I had to work with the insurance company, venue, and their lawyer to figure out how to do this without insuring the entire building.”
Her high net worth clients come with lots of policy add-ons, like coverage for issues ranging from cyberbullying to carjacking, and even kidnap and ransom. And while her clients can afford a $5 million ransom, most ask her what to do in case something like that happens.
She now offers them a policy with a partnered security company that takes care of everything in such a case.
But breaking into this niche takes dedication, she adds. “If you’re just starting out, and you’re selling retail insurance, selling on commission, that’s probably going to be the quicker way to make money. Closing a sale for a high net worth client takes longer,” she says. “But once done, the premiums and therefore the commissions are higher. It’s an investment in time. I can’t imagine doing anything else.”
Bernie Robertson, Corporate Risk Manager, Knox Insurance Brokers, Ltd. handles “everything from an explosives hauler, blasting contractor to diamond core driller exploration companies.”
Having insured the mining and exploration sector for the past 23 years on operations in six countries, you could say he’s dug in.
By getting involved in trade associations and providing them with risk management […] I get a lot of referrals back.”
He’s on the board of the Canadian Institute of Mining and Metallurgy and the Canadian Diamond Drilling Association. “By getting involved in trade associations and providing them with risk management […] I get a lot of referrals back,” he says.
Canadian mining companies have projects worldwide and Robertson has become well known among the mid-tier and smaller operations.
“There seems to be a disconnect within the larger firms in dealing with the small to medium sized accounts. If it doesn’t meet a certain premium threshold […] in most cases they don’t get the same level of service that I provide.”
“I go to the site and I actually look at what the needs are.” That level of attentiveness pays off. In one case, for example, a graphite operation wanted a sprinkler system. “Their cost was $150,000. I came back to them with a proposed work-around […] which reduced the cost down to $40,000, and still met the underwriter’s requirements,” he says. He’s not there to volunteer, however. “I don’t work on commission basis; I charge a fee for service to my accounts.”
Chatting with a hockey buddy in the industry led Robertson to the sector, identifying it as an opportunity to get into an area “not everyone and their dog” already understands.
“It took me about seven years to really become a specialist. My expertise developed over time with more exposure to more people; word started getting out that I know what I’m talking about,” he says.
Obtaining that knowledge can’t just be done from a desk, either. “I sat on a remote site for four days in the freezing cold and observed, then completed two days of on-site safety training to get a better understanding of what’s involved in the process.”
Mining companies need the same type of coverage as a small manufacturing company, Robertson explains, but “there are usually more zeros at the end of the numbers”. “As far as risk level goes, we’re not just talking about potential loss of life, but also potential lost production. When you have a major mine down for an extended period, we’re talking millions per day.”
Robertson understands his research is never complete. Autonomous vehicles, for example, present a new set of challenges.
“It will make the industry a lot of safer, but it will deplete the number of miners that are required,” he says. With cybersecurity in play, “now I’m having new conversations with the companies that are moving into that risk space.”
Granted, Robertson knows it’s harder for younger brokers to carve out a niche market as they have to “align themselves with what management wants,” he says. “But you may have better luck finding your special something within the boundaries of a larger structure,” he says.
Chris Floyd, CIP, has been part of the Ontario Teachers Insurance Plan (OTIP) for nearly 24 years, working his way up to his current role as president.
As a not-for-profit (established in 1977) OTIP covers the gaps in educator insurance left by retail insurers. His customers aren’t really customers, but rather, members, Floyd says.
“When you’re buying insurance products from OTIP, you’re supporting our group insurance program and education, because we don’t have shareholders.”
Their member relations team handles “complaints, compliments and comments,” he says, “so no matter what the member has to say, we’re capturing it.”
Being an expert in this kind of niche market allows us to be very bullish about our opportunities.”
The feeling members have of being heard is aided by OTIP’s involvement in the claims process, the bulk of which is handled internally. “In our long-term disability, property and casualty business, and to a large degree in our prevention health and dental business, we handle all our own claims,” Floyd says.“We insulate the member experience. We own our own independent adjusting firm so we can handle our own home and auto claims. So that experience, that value proposition, transcends at every point of the transaction.”
The entire business is guided by the teacher’s unions. “Having a board that gives us strategic direction […] gives us a competitive advantage,” says Floyd.
“Educators are fiercely loyal. They are very open to communicating to us, whether it’s the good, the bad or the ugly. In other segments the customers would be upset and they would just leave and you would never know. We don’t need to advertise our services in mainstream media. We do have an online presence, but OTIP can communicate directly through the union.”
With direct access to their client base, OTIP tailors its products with confidence.
“For example, we have a one-of-a-kind homeowner product that is unique to the education community – for teachers who take personal property to school.” Through early intervention on claims, Floyd can also help an educator successfully re-enter the workforce after a disability-related absence.
For many products, OTIP still competes with the retail market. Educators can buy personal liability products wherever they choose, he says, so they have to stay ahead of the game. “We’re building out our digital capability and optimizing our search engines, but we’re doing it inside of the niche.”
Being a retail broker focusing on personal lines today “could be a pretty scary thought,” Floyd says, but finding a niche is key to future-proofing your brokerage.
“Being an expert in this kind of niche market allows us to be very bullish about our opportunities,” he says.
Copyright © 2017 Transcontinental Media G.P. This article first appeared in the May 2017 edition of Canadian Insurance Top Broker magazine
This story was originally published by Canadian Insurance Top Broker.