I sat in the office of a man overseeing operations for one of the nation’s largest insurance brokers and asked the secret to their success. He laughed, “We get to know the client really well. When the client’s wife goes shopping, the broker’s wife takes her and pays for everything on our corporate card. If he ever ended his relationship with us, his wife would divorce him!” If you don’t believe anything else about property and casualty brokers, know this: insurance brokers are relationship experts. Could this be a problem?
A powerful web of conflicting interests is spun when 93% of the USA’s $900 billion property and casualty insurance premiums passes through the hands of brokers who work for both the carrier and premium payer. You might be the hapless prey caught in this web until you use a strategy that gives you the insight, power and control to free yourself and drive down your costs substantially!
Why not try DCI’s “3-Step Strategy”?
- See each broker as a receiver and see yourself as the star quarterback.
- Spread the field.
- Throw a better “Football” (the submission package).
#1. As Quarterback, you should have 3-5 great receivers (brokers) to pass to.
Every broker wants to be the quarterback. “I’ll take charge of everything and run the plays,” he assures you, “I have access to all markets.” The problem is access doesn’t guarantee success any more than calling (202) 456-1111 guarantees you’ll reach the President of the United States. Success requires that you have clout. With “direct writer” carriers who pay no broker commissions – your broker has no clout and no interest. Brokers have their greatest influence with a handful of carriers who get the bulk of their business. When a broker solicits multiple carriers and certain ones “decline to bid,” the carrier isn’t necessarily declining you. The might just be declining your broker. This is why you need 3-5 brokers to access 10-20 markets with maximum success.
Great brokers working their best markets are like receivers running their routes and not crossing into another’s. Whoever can create the greatest gain (price plus service) is the one who receives the business for that year.
#2 Throw to a wider field – Not just brokers/carriers in your city.
Though insurance carriers in different cities go by the same name, some function better than others and all run as independent profit silos. Knowing where best to enter the market is critical. Often it’s not the region where you’re headquartered. An oil company working in California’s San Joaquin Valley discovered that his carrier’s Houston office was more proficient and cost effective than its west coast office. There are analysts with databases identifying the best carriers in various cities throughout the nation, and the top performing brokers who are aligned strongly with them.
#3. Use a better football – Improve your submission package.
Can you imagine being the quarterback in an NFL game and having your center snap you a Nerf Football? Every time the typical broker volunteers to write the submission package by putting together a few pages here and there, you end up playing with a Nerf Football. The submission package is your football, the document each broker uses to command best pricing from his preferred insurance carriers. Do not assume your awesome broker creates an awesome submission package. Brokers are relationship experts but a thoroughly prepared submission package that can be used to drive down premiums 20% is not his core expertise. When you play with “Nerf” submission packages, there will be gaps in the narrative and the underwriter will compensate by hedging the premium upward. That hurts you.
The quality of your quotes requires a thorough, precise, and independently developed submission package written by a 3rd-party analyst specializing in writing submission packages. The expert:
- Conducts interviews to thoroughly understand your operations.
- Prepares a uniform bid document (RFP).
- Verifies technical accuracy of all your contract terms/conditions/endorsements, etc.
(In one case, the analyst found a gap and advised coverage where the broker had not seen any gap. Months later, there was $600,000 loss, which, because the client took action on the analysis was completely covered, but just in the nick of time.)
All responding brokers are given a certain date to bring you their best quote and answer your questions regarding their servicing capabilities. When you, the newly empowered star quarterback, are empowered with the three-step strategy you’ll be throwing touchdowns every play.
Can you keep your current broker? That’s up to you, the quarterback. If your broker is your close friend, you can always remain friends, and with your saved money you can write your friend a check to make him/her whole on any lost commission. You’d still have so much saved money leftover you could send all your employees and their spouses on a shopping spree! We invite you to take the field and use DCI to win every game from here-on-out.
Interested in what DCI’s 3 Step Strategy to reduce insurance premiums can do for you? Call (888) 395-0809 or email us at firstname.lastname@example.org for a no-cost analysis.