Filed Under:Agent Broker, Agency Management

Making the case that broking is broken


If brokers continue to focus solely on renewals, they risk losing clients who are looking for added value from the relationship. (Photo: Thinkstock)
If brokers continue to focus solely on renewals, they risk losing clients who are looking for added value from the relationship. (Photo: Thinkstock)

As we’re now well into another year, the easy tendency for everyone involved in the insurance industry is to keep doing what we’ve been doing: Work a bit longer and harder, and hope we can deliver the desired growth and enhancements for 2017 over 2016.

That “renew as expiring” approach to our professional life clearly flies in the face of Einstein’s famous definition of insanity quote.  The paradigm has shifted, and as players we either revolutionize our approach now, or simply cling to the hope that things will work out fine, which by now we all should know is not a strategy.

In the sections that follow, we share facts, experiences, and perceptions that make the case that, although this industry is not terminal, it’s certainly in the ICU ward for both clients and brokers who don’t answer the wake-up call and dramatically alter their approach to how they do business. It’s also a ticking time bomb for senior managers unwilling to strategically focus on risk, as opposed to relegating insurance to a commodity buy with minimal evaluation and consideration on a once-a-year basis. Some companies are already responding to this challenge; however, far too many organizations are doing their best impersonations of the dinosaurs that wondered what the flash in the sky and the splash off the Yucatan was all about. 

In considering the paradigm shift and all of its accompanying consequences, we address the following questions:

  • What is the evidence supporting the claim that broking is broken for both clients and the brokers themselves?
  • How has this happened to such a well-established and proud industry?
  • What are the consequences for those firms that don’t respond?
  • The case for breakage: The client view

Let’s start with the client side of the equation as we assess the situation. What else do organizations in the vast middle market buy where they know so little about what they’re buying? Clients frequently feel like victims of an insurance marketplace they don’t really understand.

The standard “MO” is for the broker to come into the CFO’s office about three months before renewal, collect minimal information, get a far-too-incomplete submission to the incumbent carrier (this is based upon frequent carrier comments to us), come back with a minimal price reduction, take way too much credit for the results, and then generally disappear until next year. Sadly, most clients in the middle-market space say that they’re happy if their broker just returns their calls.

There are several major problems with this scenario. First, it puts the broker’s entire emphasis on risk transfer, with limited to no consideration given to risk mitigation or risk retention. Such a broker is doing nothing to favorably impact the client’s risk profile score, which is analogous to an individual’s credit score.

We recently asked a panel of senior carrier executives how often they hear a business case as to what a broker has done to improve a client’s risk score, and the universal answer was, “We don’t recall that ever happening.” 

Cracks on the broker side

Most brokers proudly tout their success based upon client retention rates; however, we contend that this figure has more to do with the inability of their competitors to take business away than it does with their talent in serving clients and providing superior solutions. Opening new doors has become a rare skill indeed. Far too many established producers fail to generate new client revenue that even comes close to 10 percent of their current book. Lose one large account, and severe pain hits both the person and the organization. 

Organic growth must be the fuel for any broker’s future, and frequently the gas gauge is registering close to empty. Pipeline anemia is an epidemic in our industry. Established producers have often over-fished their pond of friends and acquaintances, are seeing their client revenue dwindle in the generally soft P&C market due to bankruptcies and acquisitions, and have not opened a new door in years. They know their craft well, they know how to find resources and move opportunities in the pipeline along, but they struggle to feed the front end of their pipeline.

There must be a significant change in the role played by insurance brokers that must go beyond a focus on premium pricing in bringing value to clients. Such a value-defining approach points to the need for organizations to develop more advisors in property and casualty production roles and account teams, find their industry verticals, invest in them, and be visible and vigilant in collecting, analyzing and distributing information about every aspect of risk challenges and enhancements.

Where do we go from here?

Is broking broken? Ladies and gentlemen of the jury, we rest our case and are confident you will vote to convict. It’s time for a revolutionary resolution on both the clients’ and risk advisors’ parts to fit it. We’re not talking about a fine-tuning process here. Pretty websites and new titles on business cards won’t result in the significant shifts that are clearly needed. Success into the future on both the client and broker/advisor side requires a revolution, not an evolution. 

Rest assured that the news here is not all bad. There is currently a strategic window that is open for clients, advisors and carriers as well to go through into a much better place, and some enlightened and innovative organizations are doing just that. Working with our current risk advisory clients we’re seeing evidence of success every day. The journey to this more productive relationship frequently requires a personal trainer, or Sherpa guide in mountain-climbing terms.

We’ll continue to push the bar to higher levels as we challenge assumptions and ask the hard questions. We look forward to many more years in this industry as we continue to help it move forward into what is actually a target-rich new paradigm for those professionals and organizations with the foresight and commitment to cast aside broken approaches and charge forward with better strategies for success.

George Lucas, Ph.D. is Director of Coaching and Learning at Schul-Baker Partners. He can be reached at  

 William Baker is CEO and president of Schul Baker Partners. He can be reached at


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