Five Risk Management Tips for Brokers
Mar 07, 2023
Insurance brokers and agents are deeply involved in risk management. However, their daily existence is centered around generating new business, routine transactions with customers and carriers, and running their company's “back room”. Outside of pressing issues, a customer's risk management priorities can easily get pushed down low on the priority list on a given day.
Ironically, by smartly addressing the big-picture risk management needs of customers and prospects, a broker or agent can generate more business, strengthen relationships, and realize meaningful efficiency and productivity gains. But how does one achieve this? Here are some pointers:
1. Help customers assess risk holistically.
Buyers are often fixated on their largest risk-related line items or recent disruptive events. Yet, many significant opportunities to mitigate risk are neither triggered by a must-respond situation nor by an obvious superficial review.
It is better to consider the company’s entire spectrum of risk exposures and perform an orderly assessment of priorities. Of course the largest recurring costs or the most frequent sources of risk deserve a place on a shortlist, but so do the things that may be out of a risk manager’s traditional purview.
Yet, these items can be disruptive or accumulate cost over time, becoming outright existential threats to the business itself. Most organizations aren’t staffed to consider risk from this perspective, nor are they ready to take appropriate action. The broker or agent can be the trusted resource to guide to opening their perspective.
2. Help customers automate.
The small-to-midsize business probably doesn’t deploy all the technologies that would be beneficial and effective, and there’s probably no clear path for them to reach this state without hands-on guidance. Because of this, they miss out on significant cost management and productivity improvement opportunities at a time when risk management talent is scarce and expensive.
Since perfection can be an impossible standard, the broker or agent is well suited to bridge this gap. This doesn’t require a complex boutique design for each customer.
Rather, they must identify and evangelize technologies that can be deployed on a repeatable basis across multiple customer verticals, employee sizes, and revenue goals. On top of that, they should aim for solutions that are feasible to learn and deploy without years of experience, while accommodating multiple lines of coverage.
3. Be the analytic backbone.
Although virtually all customers pursue growth, there is likely a lag between business growth and new in-house risk management capabilities. An organization's risk management practice is likely to be in a perpetual state of catch-up relative to the organization’s exposures and needs.
This again presents an opportunity for the broker or agent. By providing an analytic backbone for their customers, the broker simultaneously differentiates itself in the eyes of the buyer, insulates itself from market-driven price competition, and is able to present its customers to insurance underwriters in the best possible light.
Far from being a daunting new task with prohibitive cost and talent implications, the best tools can make this process a time-saver for both the insured as well as the broker. Automated dashboards can greatly assist in regular check-ins with clients, and act as a touchpoint for the health of a broker’s book of business.
4. Adopt a consultative, not transactional, mindset.
The agent or broker who competes solely on price is doomed to be replaced, as they incite an unhealthy, short-sighted, price-driven buying perspective.
The small-or-midsize commercial buyer needs help adjusting their mindset to address the things that matter most. This includes taking a longer-term perspective regarding risk and its total cost. Regardless of customer size or circumstance, every customer in the agent or broker’s portfolio likely experiences a meaningful deficiency in its in-house risk management capabilities. Only a select few of them will be aware of how significant this gap may be.
5. Pursue multi-purpose technology.
Just as circuses can’t afford to haul one-trick ponies from town to town, risk managers can’t afford to support siloed, single-purpose SaaS insurance solutions. Investing time, energy and money in risk management resources must address a broad spectrum of needs and exposures.
The best systems will be coverage-agnostic, adaptable to changing circumstances (especially in multi-location businesses) and be applicable to both pre-loss and post-loss risk and incident information management.
Editor's Note: This post was originally published in April 2022, and has been updated for accuracy and comprehensiveness.