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Even in today's soft market, smart brokers know it's a mistake to focus solely on finding the lowest price for their clients' coverage. If all you're bringing to the table for your client is low-priced coverage, you'll lose that account when another broker presents them a proposal that's cheaper. You need to present a more thoughtful solution to their needs along with a competitive price.
This market is actually an opportunity to strengthen your relationship with your client by placing them in a comprehensive program tailored specifically to their business needs. This provides your client with the best coverage for their unique needs at a competitive price, while you establish yourself as a trusted advisor who understands their business and is willing to put in the extra effort to find the best combination of coverage and price.
The most successful commercial agencies understand their client's business and present them with coverage options that are perfectly tailored to the needs of that business. To do that, agencies frequently use programs specifically designed to serve that industry. With a specialized program, you don't need to be an expert in your client's business because the program administrator is. A good program administrator will help you to evaluate what coverages your client needs and how to perform a valuation on your client's business, including equipment, property and inventory.
Top-performing agencies who work with program administrators can retain accounts against outside pressure, even at a higher premium because they're delivering the best combination of coverages, price and service. This strategy works through all market cycles because these agents never lose sight of the fact that their clients are paying them for their advice and guidance. They have built trust, demonstrated understanding of their clients' business, and delivered what the clients need.
Of course it's not realistic to ignore price, especially in a well-publicized soft market where savvy business owners read about prices dropping and expect their own good news at renewal.
As an independent agent, you know that one of the things you have to defend yourself against in a soft market is increased prospecting from other agents, who usually try to lure clients away with a lower price. When that happens, your best defense is your strong relationship with the client, the coverages and services you provide. Why programs?
Program administrators are successful because they solve problems for businesses with unique needs and make agents look good to their clients. With a specially designed program, you don't just get all your coverages in one place; you often get coverages that are not available anywhere else. And you get the kind of focus and deep understanding of your client's business that allows you to deliver real value to them as their advisor. Programs provide:
Products that are tailored to specific industries
To develop a custom insurance program the right way, program administrators often bring in people experienced in the industry they're considering for a program. Whether it's an underwriter, a program manager or a panel of experts, you want people who understand the businesses and the unique risks they face. First, they study the industry as a whole, including economic trends, legal environment, and whether a major insurer for the segment withdraw from the industry. Program administrators then study the businesses themselves. What have historically been the most difficult and disruptive losses? Are they frequency or severity driven? Do they face losses that other insurers don't cover? Where are the coverage gaps? What business segments are average insurers unwilling to cover? Who is forced into the E&S marketplace? How many unique variations of this type of business are there, and how can you tailor a program to be able to provide coverage to more of them?
These questions and more help a program administrator design the most comprehensive insurance program possible for a specific industry, making sure they are covered for any eventuality in ways that are not possible through conventional channels. When you are providing your client that kind of coverage, you can both rest easier.
Industry expertise, guidance and services that brokers and business owners alike value. Along with customized coverages, a program offers industry experts who can help brokers understand the intricacies of their client's business and ensure they are covering all possible exposures.
For example, take a program for commercial greenhouses, nurseries and retail garden centers. Points to consider include:
o When performing an accurate valuation of a greenhouse, you must consider the structure and the accompanying machinery: boilers, generators, cooling equipment and watering systems. You must also consider the crops, and the fact that their value actually fluctuates during the course of the year.
o If a grower has a heating system failure in a greenhouse during winter, they need to be covered for not only machinery replacement value, but for the crops lost when the system fails.
o To protect against the possibility of a greenhouse collapse, consider the cost of not only structure coverage, but the time needed to get the greenhouse running again–and the cost if the client misses the next planting cycle.
Knowing the right questions to ask is a major step to demonstrating your understanding of the business, differentiating you from those brokers just selling on price. Having a program administrator's expertise to help you ask and answer these industry-specific questions means you can be confident you have given your client the best coverage possible.
A program administrator's on-staff industry experts can also use their experience to help your clients with loss control guidance. They've seen it all, so your clients can benefit from the loss experience of others in their field. These experts can help your clients assess their safety programs and provide guidance on training their staff.
Stability through changing markets
In a soft market, carriers looking for new sources of income expand their risk appetite. This affects both the E&S market and program business. Many carriers are suddenly willing to entertain risks from industries they wouldn't touch during a hard market. When the market reverses, carriers who are currently willing to write unique businesses may decide they don't want this business anymore. If you placed one or more of your clients with them during the soft market, you have to deal with displacement once the market hardens and you're left scrambling for coverage.
For example, we have a program that has been going strong for 18 years, through market cycles, and we have accounts in that program that have been with us for 12 years or more. That kind of stability is valuable to our brokers, who recognize stable placements that avoid frequent disruption mean less frictional cost. In other words, the fewer times you have to market an account, the more money you are going to make on it.
Focused claims management for better results
Program administrators are in a unique position to fight hard for their clients, with more leverage than the average agent or broker might have. Program administrators use that leverage to make sure claims are being handled as well and as quickly as possible. Well-managed claims get resolved more quickly and run up fewer expenses, which results in lower loss costs. This benefits the insured because lower losses result in lower premium down the line. Insureds also benefit from a program administrator's expertise in making sure they have been provided the best, most comprehensive coverage they can get, so that when a claim arises, they are more likely to have the right coverage.
With all that said, programs aren't for everyone. Your client may not need or qualify for a specially designed insurance program, or there may not be one available for their industry. But if you have clients with unique insurance needs who could benefit from the deep industry expertise and customized coverages, a program could help you deliver tremendous value to your clients. In the end, it could just be the thing that keeps the wolves from your client's door.
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