In challenging times, many business relationships are put to the test. That’s true in the insurance sector today, as carriers and brokers navigate a hard market and the related stresses it puts on their partnerships.
In the Canadian Underwriter National Brokers Survey, sponsored by Sovereign Insurance, one of the questions posed to brokers was: to what level do you agree with the following statement: “Insurance carriers are striking a fair balance between the interests of carriers and brokers.” The result was 45% agree and 55% disagree.
That’s not surprising, as the hard market means brokers’ jobs aren’t easy. In a hard market, carriers typically apply stricter underwriting criteria, charge higher premiums, and don’t renew accounts in areas that are prone to losses. Capacity, or the supply of insurance, is reduced and there’s a subsequent increase in demand. Compare that to the previous soft-market cycle when capacity was readily available at the best price, and it’s easy to see the challenges and frustrations brokers are dealing with today.
While these aren’t the best of times, it’s vital for carriers and brokers to work together for their mutual benefit—and, most importantly, that of clients. Having strong partnerships will not only help carriers and brokers weather the storm, but also help them emerge stronger and more resilient on the other side.
Here are key ways insurance carriers and brokers can enhance their partnership:
Focus on communication: Open and honest communication is an excellent way to enhance partnerships and ultimately assist clients. “Carriers need to help brokers understand what’s happening in the marketplace—and why,” says Don Maxwell, AVP Commercial Solutions, National Operations, at Sovereign Insurance. This will arm brokers with the awareness and information they need to have potentially difficult discussions with their clients, for example, explaining why their costs are increasing, or why terms are changing. “Even something as simple as promptly answering phone calls and emails shows that insurance partners are in this together with brokers,” says Don.
For their part, brokers need to provide carriers with high-quality, detailed and accurate quote submissions with all the basic risk information. This will allow the underwriter to quickly qualify an account and minimize questions.
See: “How brokers can be successful with quote submissions”
Be empathetic: Empathy is fundamental when it comes to carrier/broker relationships, but it can sometimes fall by the wayside. It’s important that underwriters have an appreciation for brokers’ roles and responsibilities, as well as the pressure they’re under. They need to think about the end client as well, and what impact their own actions in underwriting will have on the client. Brokers will value carriers that demonstrate empathy, compassion, and care, which will go a long way toward the longevity of the partnership.
Similarly, it’s important that brokers understand the tough hard market adjustments carriers are required to make to ensure the longevity of their business and ability to continue to pay claims. “The reality is that claims trends have outpaced industry expectations, and as a result have also outpaced the accompanying premium increases over the years,” says Terry McGrath, AVP Commercial Solutions, Western Region, at Sovereign Insurance. “Making difficult adjustments to our capacity and risk appetite is a necessity to ensure that our business is financially strong, and that we’re able to deliver on our promise and live our purpose of protecting Canadian businesses.”
See: How the hard market is a time for opportunity
Provide added value: As the saying goes, you can’t win on price alone. “Providing added value demonstrates to brokers that the carrier isn’t just another company providing a price, but also offers deeper benefits—both to brokers and clients,” says Kevin Stedman, AVP Commercial Solutions, Eastern Region, at Sovereign Insurance. “As a partner, we should communicate why we’re going to insure this risk, what the premium is, and what value-added services we’re offering.”
Whether it’s offering clients loss control / risk engineering services, providing brokers advice when an issue arises, or even helping brokers present information to clients, value-added services position carriers as a trusted advisor and support for brokers. Value-add resources, tools and services can then be utilized by brokers to support them in further educating and advising their clients.
Be out front and proactive: Rather than the passé way of waiting for business to come their way, carriers need to be proactive in their interactions with brokers. For example, as part of Sovereign’s new sales enablement initiative, which will help us build deeper connections with brokers, one discussion topic is how to be a proactive participant in every piece of business.
“Rather than simply being “quote number 10” on the broker’s desk, we want to be tenacious about the new business quotes we provide and show brokers that we’re interested in writing the business,” says Don. “Similarly, brokers who invest in their relationships with carriers will have a deeper understanding of their unique risk appetites and the types of target submissions they’re looking for – streamlining the process and saving everyone time and effort.”
Whether it’s a hard market or a soft market, getting back to the fundamentals of good partnerships—communication, empathy, added value and participation—will help earn and keep brokers’ trust and respect. When the partnerships between carriers and brokers are strong, everybody wins.