The roll of the pennsylvania insurance broker is evolving. More and more often
insurance brokers are being asked to provide more than just insurance
placement services. As we move forward over the next few years and as
the financial and economic climate continues to evolve, financial
service professionals, such as insurance brokers, will be expected to
provide broader services and more aggressive negotiated results for
their clients.
In the past, and up until now, many insurance customers have chosen to
place their coverage with brokers they consider to be friends (be it a
golf buddy, classmate, neighbor, relative, etc.). For decades these
types of friendly relationships were the preeminent means by which
insurance brokers were able to retain clients in the face of
competition. Be it guilt, a sense of loyalty, or another altruistic
motivation, clients feel that they owe their insurance broker(s)
something and exhibit palpable amounts of regret when it comes to
leaving one broker for another.
As recent as this morning, I was in a client’s office where they were
wrestling with the idea of choosing us (Williams Agency) to replace their
broker of over 12 years. Even with our re-engineering their account,
being able to add considerable amounts of coverage, and still being able
to reduce their overall premium expense by nearly 31%, they still felt
guilty for wanting to switch. When I as a customer hire a mechanic to
work on my car, a plumber to work on my faucet, or an arborist to prune
my trees; I typically go with the highest level of service that I am
comfortable paying for. But when it comes to insurance, many clients
feel that they are betraying a “friend” when they move brokers.
Think for a quick second about the example above and what if the client
had been paying an extra 31%, give or take, for each of the last 12
years with the other broker. That means that the client would have
unnecessarily paid for an extra 4.2 years of insurance coverage. The
example proves that the primary issue insurance customers face with the
“friendly” type of insurance relationship is not that it leads to a lack
of coverage, but rather that it leads to a lack of service and savings
due to the lack of aggression in their brokers level of negotiation of
coverage terms and premium rates.
When insurance brokers believe that a client will remain loyal to them
and not allow other brokers to work for the business, it creates an
atmosphere where the broker is no longer incentivized to work in his/her
client’s best interest, but rather to maximize their compensation while
doing just enough to keep the client from contacting another broker.
A client’s insurance program, regardless of size, should have a plan for
the future. A plan changes the dynamic of the client-broker
relationship from the broker being a “friend” who gives the client their
only insurance option(s), to a liaison and partner who works with the
client to attain measurable goals that the client can then track and use
to evaluate the brokers performance.
I hate to be the bearer of bad news for all the “old-school” brokers out
there, but there is always “that guy” that must say it how it is and I
guess I will go ahead and do it…
Lazy brokers of the industry, your days of being able to merely quote
and socially sell insurance are numbered. Either shape up or ship out!
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Dec 06 2010