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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

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.