When it comes to providing value-added services to their clients, insurance brokers — particularly commercial brokers — are seeking innovative ways to help their clients with the claims and risk management side of the business.
This is in contrast to the traditional, more limited view of the broker as an advisor on insurance policy coverage options and price alone — an “order-taker,” as some brokers refer to this sales approach.
In today’s world, in the minds of both consumers and brokers alike, providing holistic advice not only on coverage, but also on claims handling, risk mitigation and loss control is increasingly becoming “table stakes” for brokers who wish to be seen as trusted advisors to their clients.
“All of the leading brokers, I would say, are moving towards a risk advisor skill set and thought process,” David Pettigrew, president and CEO of Harvard Western Insurance in Saskatchewan, tells Canadian Underwriter. “That means helping educate clients on understanding their risks and navigating them, and then using insurance where necessary or desirable. It’s not just providing insurance-specific risk services. This is a trend, especially in the commercial insurance market. The more information the broker has available to them, the easier it is for them to transmit it to their clients, and the better position they will be.”
The trend is confirmed in the results of our inaugural 2020 Trusted Advisor Survey, conducted during the summer months of the global COVID-19 pandemic. Canadian Underwriter asked an open-ended question to more than 180 brokers participating in the survey: “What value-added services do you provide your customers to increase retention and make sure you win the business?”
Of the 173 responses we received from brokers, 35 answers — about one in five — emphasized the importance of providing holistic advice on claims, risk management and loss control. This compares to the next-highest answer of reviewing business contracts for insurance implications, which turned up in 23 (13%) of the responses. The third-highest answer was offering “personal” or “personalized” service to clients.
The consumer demand for a more holistic approach to risk advice was also clear in the consumer portion of the survey, which was conducted in March 2020. There, Canadian Underwriter asked more than 600 personal lines consumers and 165 business owners about whether they thought their brokers were “trusted advisors,” characterized by offering consumers choice, advocacy, and advice.
Approximately 70% of both business and personal lines consumers agreed with the statement that their brokers were “trusted advisors.”
But if almost everyone is a trusted advisor, how do brokers set themselves apart from each other in offering the best service to their clients? The consumer survey results provide a hint: Just 53% of commercial lines clients and 46% of personal lines clients agreed that their brokers told them about “ways to prevent loss or damage, helping [me] to reduce my premiums.” So, consumers would clearly like to see brokers taking more of a risk management/loss control type of approach.
The trusted advisor survey shows that brokers already see themselves as offering more holistic risk advice. For example, when we asked brokers if they told clients about ways to prevent loss or damage, helping them to reduce their premiums, 93% of commercial brokers said yes, as did 83% of personal lines brokers. (In fairness to personal lines brokers, as one broker mentioned in a separate interview, it’s more difficult to provide non-obvious risk advice in the personal lines auto context. To take an extreme example, “Don’t crash your car,” is not particularly insightful advice for reducing a client’s auto premium, although if the client followed the advice, it would definitely help.)
When we asked brokers an open-ended question about what value-added services they provided, many talked about the advice they were providing in the areas of claims, risk mitigation and loss control.
In the claims area, many talked about establishing “concierge” services or 24/7 reporting centres. As for advocating on behalf of a client during the claims process, one broker reported taking a more proactive approach. “We attend significant claims, meet the service providers and adjusters, and in several cases have been able to negotiate coverage for our clients that had been previously declined.”
Another broker reported having “a claims advocate in-house who helps walk through the claims process and ensures [clients] are happy with the outcome.”
As for offering risk management advice, many brokers appear to be assuming the mantle of a risk manager by coming up with a comprehensive risk management plan for the client. This includes not only offering insurance coverage options, but also discussing alternative means of risk transfer (e.g. other than through an insurance policy), such as self-insuring through a captive, for example.
The trend towards offering risk management services speaks to a shift in how brokers may need to be trained and licensed going forward. As Brenda Rose, vice president of FCA Insurance Brokers, observes, there is providing generalized risk advice to business clients and consumers, and then there is getting into the detailed, nitty-gritty of specific advice on loss control measures, which may require a different skill set.
“Providing [alternative] insurance options to address the risk — that it’s not just about a price, that it’s not just about buying more insurance — that’s one conversation,” Rose says. “The whole concept of risk control in a physical sense is an entirely different qualification, and not everyone who has just graduated and got a licence [as a broker] is equipped to do that. It depends on the nature of the risk that you are talking about.”
Where brokers lack specialized expertise to make concrete loss control recommendations, the trusted advisor survey suggests they are putting their clients in touch with experts who can.
“[We offer] risk management services, including loss control strategies, partnering with [third-party] companies to support claims at claims time,” one broker in the survey reported.
Another said it provides “risk mapping and risk management services to larger clients” through a partnership with a third-party industry risk management software provider.
Some offer risk inspectors and risk control seminars. One broker reported leveraging 30 years of previous experience as an insurance inspector to provide “very advanced risk management services.”
Taking the holistic view will mean seeing returns later down the road, as one broker in the survey suggested. It means taking a long-term view of the broker’s relationship with the client.
“Earning trust is more important than winning the business,” as one broker in the survey commented. “Being a client’s trusted insurance advisor is ongoing, not tied to a single renewal or policy placement. Value-added service means breaking from the routine and constantly updating, reviewing, and questioning insurance programs. The broker must educate the client and provide solutions, with the client making informed decisions with such input.”