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Brokers

9 Things Brokers do that Drive Risk Managers Crazy

They may be well-intended, but brokers sometimes drive risk managers nuts with their behavior.
By: | July 11, 2018 • 7 min read

Your broker can be a lifesaver, but sometimes they may not always be doing what the risk management team needs.

1) Relentlessly pushing ancillary services

In full disclosure, I am happy as punch with my broker.

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With that said, my gripe with the industry generally speaking is their, at times, relentless marketing of potential candidates. If they find you are happy with your broker, that is not enough; you then get inundated with a myriad of outreach calls related to ancillary services they provide. You add that to the W/C service trolls, LMS, data, ERM etc. folks and it is literally like guarding a modest hen-house from a pack of wolves.

— Zachary Gifford, director, system-wide risk management, The California State University

2) Not offering their best advice

I’m very happy with my broker team now. That is because I made the changes to the team quickly when I wasn’t satisfied with a particular team member.

Not offering their best advice and standing by while a client makes a poor decision that they (the broker) know is a bad idea. I consider our broker to be integral to our risk management mission and we will succeed or fail as a team.

When a broker tells me after a mistake has been made that they would have made a different decision but “… that’s what you said you wanted to do,” that is really frustrating. If a broker knows the decision the risk manager is making is a bad one, then they need to have the courage to speak up.

— Jim Cunningham, vice president, enterprise risk management, Pinnacle Entertainment

3) Not looping in the risk manager 

A second frustration stems from brokers who have long-standing personal relationships with our executive management team and will communicate with those executives without including the risk manager.

Professional courtesy dictates that the broker should be including the risk manager in all discussions associated with business operations. Clearly there is value in reliable long-standing relationships between the business and the broker. *This concern was echoed by an award-winning higher education risk manager who wished to remain anonymous, who listed “Brokers overlook my requests thinking I am not that important within my organization,” as one of this top issues with brokers.

Back-channel conversations can create issues — such as who is calling the plays — that are not necessary. The risk manager must be part of every conversation that relates to the business.

— Jim Cunningham, vice president, enterprise risk management, Pinnacle Entertainment

“When a broker tells me after a mistake has been made that they would have made a different decision but, ‘… that’s what you said you wanted to do,’ that is really frustrating.” — Jim Cunningham

 

 4) Poor knowledge of the risk manager’s industry

While I understand and respect the impetus of making a sale, one of the frustrating things from the buyer side that most brokers are not cognizant of, is that most brokers are so intent on selling whatever line(s) they are in charge of that they do not spend the time necessary to listen and understand what the risk manager’s top-of-mind concerns are.

Jean Nkamdon, risk management and compliance manager, The Washington Post

I speak to brokers often, and every time they try to convince me they have the best solution for whatever line my business currently has. However it is seldom they actually tell me or share something relevant to my business/industry.

Risk managers are looking for strong partnerships and strong advisers with brokers. However, this is often lost when brokers cannot demonstrate an understanding of the risk managers’ industry, the business landscape and/or trends in that industry.

As a risk practitioner, my expectation of my broker is not only to place my policies but to also be keeping an ear on the ground, to apprise me of the developments in my industry or the market place in general that I should be aware of, so I can have data points I can draw upon when necessary.

— Jean Nkamdon, risk management and compliance manager, The Washington Post & Companies

*This concern was also echoed by the anonymous higher education risk manager, who listed “Lack of intuition and anticipating my needs” as a failure of some brokers.

5) A disconnect between the producer and the servicer(s) of the account

Another area of frustration is the disconnect between the producer and the servicing of the account. I often remind brokers vying for our business that however great the sale presentation is, the servicing of the account is what makes or breaks a relationship with a broker.

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As you know, most producers can drum up business all over the country and get credit for it, while servicing teams are often local/regional teams that actually do the work and are not often recognized for it.

It seems to me there is an inherent conflict built into the brokerage model where producers are incented to drum up business and drop it on the lap of the servicing teams, often with no coordination. This approach ultimately shoots the brokerage relationship in the foot, because unless there is coordination, the servicing team does not live up to the expectation the producing team has created.

I like to joke that I do not want to know how the soup is made, I want the soup. For illustration, each time I have a question, I would like to speak to one person who would coordinate the response to my inquiries from all the lines placed through the particular brokerage relationship.

If I have to chase each person on the service team in charge of a particular line, it is not efficient or helpful, because often situations might have implications that go beyond a particular line that could be lost when there is no coordination.

— Jean Nkamdon, risk management and compliance manager, The Washington Post & Companies

“I speak to brokers often, and every time they try to convince me they have the best solution for whatever line my business currently has. However it is seldom they actually tell me or share something relevant to my business/industry.”  — Jean Nkamdon

6) Speaking out of turn

Brokers often talk about acting as if they were the risk management department or risk manager — which is good — but it is a fine line. I really hate it when I am in a meeting and asked a question or series of questions and the brokers answer before I have a chance to respond.

While they may be acting on our behalf, they are not the risk manager, and I prefer to answer my own questions. They may not know as much as they think they do and sometimes puts the risk manager in awkward positions of having to correct them. It is particularly annoying if I have a senior management person present, because it not only feels like they are more interested in impressing them but it can also make the risk manager look unprepared or uninformed.

Thanks for asking — I feel better already!

—A long time health care industry risk manager

7) Acting like they know it all

It’s important to have an open, honest relationship with your broker/agent. That means being proactive about coverage, claims and changes that may need to be made to your insurance program as a result of your business relationships. Anyone who says “I’ve got this, no worries” each and every time you speak with them does a disservice not only to you, but also to your entity.

“Anyone who says ‘I’ve got this, no worries’ each and every time you speak with them does a disservice not only to you, but your entity.” — Marilyn Rivers

Broker/agent relationships are like any relationships you value. There’s a give and take and discussion as to the dynamic needs of your entity.

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Remember to ask questions, request information and set the parameters of the relationship you have with your broker/agent and your insurer. You are the client. They are your representative as you define your needs.
They’re your needs, not the broker/agent’s. Sometimes folks try and reverse who’s in charge. Remember, the entity within the parameters of the insurance contract they have adhered to is the entity in charge.

Also, it’s important to know your state and local ethics legislation. Risk programming should be transparent and adhere to those ethics regulations. Be wary of expensive dinners and golf games as a representative of your entity.

 — Marilyn Rivers, director of risk and safety, the City of Saratoga Springs

8)  Lack of attention to detail

The broker/client relationship is built on a thick crusty layer of trust. Sometimes, a risk manager wears many hats as a single expert within their organizations and we rely heavily on our broker(s) to be our “team”. Careless mistakes can be sometimes be benign but annoying and other times, they can be costly in terms of dollars AND reputation.

 

9) Inefficiencies

Cumbersome communications, inefficient document delivery, choppy process – all create wasted time for the client and diminishes confidence in the relationship. Things should always be made easier for the client – within reason.

An award winning risk manager in the telecommunications industry

 

What Risk Managers Appreciate

 

1) Forward Thinking

We need our brokers to work with us to stay ahead of the risk curve and during renewals ensure that the coverage we are booking not only covers our business today, but the offerings we invent tomorrow.

2) Understand our Business

Wolters Kluwer is a global company, active in 180 countries in different sectors. It takes time to understand our business. If you don’t, let us know so we can work together to bring you up to speed so you are best able to help our insurance partners better understand the risks we are asking them to underwrite. Once you do know us, grow with us, use your expertise, don’t assume we always want or need the same thing. Good barbers evolve to meet the needs of their client’s changing hairlines. Good brokers should do the same.

3) A Steady, Dedicated Team

We value consistent and seamless teamwork. We invest our time in helping your people get to know us and how we manage risk. When someone is poached, or moves, or is transferred, this disrupts the flow, not to mention our investment.  When these things do happen, which is part of doing business, manage it well. Protect against this risk by building the bench, particularly in high-demand spaces (cyber/privacy). Preparing our NextGen leaders and do-ers to take the helm should start yesterday.

Elizabeth Queen, Vice president risk management, Wolters Kluwer

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]