Best Defence is a Good Offence (June 01, 2007)

Yes, soft markets come and go. Yes, we know the cyclical nature of the business. The truth is, however, that every time the market turns, there is an opportunity to lose or gain market share.

During a soft market, do you find small pieces of your business slipping away from your organization, like sand through a sieve? Is it a question of hanging in and waiting for better times, or getting out and doing something about it?

There is no real defence against a soft market; market cycles are not within the broker’s control. So an offensive strategy should be the option of choice.

GAME PLAN

There are two places to start offensive actions.

The first is with your insurance markets. Consider your markets carefully as you look to the long-term growth of your business. Are the markets in your office merely suppliers of product or are they true partners in your business? Which markets are fully committed to the insurance broker distribution channel? Who do you see as long-term partners, committed to working with you to preserve and strengthen your hold on the distribution of property and casualty products in Canada?

The second starting position is to understand the different technology options your markets and industry vendors make available to you, and to use those technologies effectively to reach your customers, develop closer relationships with your customers and manage your business.

Brokers must truly understand their customers. Faced with increased competition and marketing activity, as well as more sophisticated buyers of insurance, many brokers are challenged to do more work only to achieve the same static results (at best!). A lot of time is spent chasing business and perhaps not as much time is taken to develop existing customers.

New pricing models and rules from insurers have given new discounts when the insurer has the customer’s whole account. When a broker loses a customer, it’s not just the automobile that leaves, but the rest of the lines of business. It’s not about chasing automobile business anymore. It’s about retention and account rounding. Pay close attention to whom you are quoting business: Your time might be better spent working on the relationship of an existing customer, identifying his or her needs and recommending new or increased coverages.

Have you segmented your customers? If you haven’t segmented and ranked your customers, do you really understand your customer? Segmentation will allow you to see who are your ‘Gold,’ ‘Silver,’ and ‘Bronze’ customers. Identify your value-creating customers and spend your time accordingly. Your customer-relationship time should be spent moving all your customers to value-creating ‘Gold’ status. In our highly-competitive industry, relationship-building is key during both soft and hard market cycles. It makes good sense to use the tools you have available to reach your customers and solidify relationships. After all, relationship-building is a critical retention tool.

In addition, the segmentation of your customers will allow you to work more closely with your markets. Hey, insurers don’t want to lose the account either! Match your customers with your markets more closely, watching risk, coverages, service levels and profitability factors.

Create a game plan to get close to your customers: protect and service them. Brokers pride themselves on offering personalized, caring service to their customers. They understand the confusion and stress their clients feel during the event of a loss. Brokers can help guide their customers through the claims process and help support them through a stressful period. Brokers and their knowledgeable staff are individuals who have taken the time to build trust in their business relationships with their customers. This is your value proposition to customers.

GAME EQUIPMENT

Most broker offices have software tools to assist in the day-to-day running of the business, including tools that will help to segment their customers. Are you running your software on the latest version your vendor offers? Invest in training and workflow development to ensure you are using this technology to the best of its capabilities. You have paid a lot of money for this technology, so use it and get the most value from it. A great game plan can only go so far if it depends for its success on using exhausted or obsolete tools and equipment.

Insurers have introduced new real-time technology tools for brokers. Some confusion surrounds them: There are various interfaces and levels for brokers to use. The bottom line goal of most markets is to provide real-time inquiry and straight-though processing for brokers.

This is happening for different lines of business and transactions, so it will take time for insurers to fulfill the promise of technology. Some brokers feel they are doing the insurers’ work; other brokers recognize the technology developed by insurers actually gives them control of the risk, control of the underwriting process, control of the service and, ultimately, the customer relationship.

Beware, though: There are technology differences between markets! Look at the insurers for the solution that provides you the assistance and workflows you desire.

PLAY TO WIN

At what point in the annual renewal cycle do you contact all of your customers? Have you reached out to provide value and service to them? Everyone wins when customers have the right insurance products. Brokers provide this value and remain the best choice for consumers for knowledgeable insurance purchases.

TEAM MEMBERS OR BENCHWARMERS?

As part of your business strategy to profitably grow and sustain your business long-term through the soft and hard cycles of our industry, consider which markets you have in your office now, and which markets you want in your office as you move forward. Do you want insurance market suppliers or insurance market partners? Are you partnering with forward-thinking carriers that uphold broker independence and value? Are you partnering with forward-thinking carriers that believe in providing technology solutions to help brokers compete against direct writers and affinity groups?

Growth strategies are a serious business…