Dynamic duo: Top strategies for creating stronger risk manager/broker relationships

“I know I'm not my broker's only or biggest client, but the team makes me feel that way,” says Lori Seidenberg, ARM, RF, senior vice president, risk management for HCP Pacific Asset Management LLC (the affordable-housing subsidiary of the Hunt Companies, a tax credit investor/sponsor and asset manager based in Denver), when asked about her seven-year relationship with her broker. “My broker is there for the bad times and the good.”

Seidenberg's comments echo those voiced in a December 2014 study conducted by J.D. Power and RIMS of large business commercial insurance customers, in which risk managers revealed they wanted a strategic relationship with their brokers, not just purchase insurance coverage through them. The study also found that the most important factor in customer satisfaction among risk professionals was how easy it was to contact the broker, followed by the broker's ability to understand the client's needs.

Risk managers and brokers who spoke with NU all agreed on the need for open and honest communication. A broker who understands both the client and its industry does a better job of representing the client in the marketplace; the broker can use that knowledge to present a more complete picture of the client to the underwriters, explaining any past losses and risk factors.

They also concurred that well-earned trust is key to making the relationship work. That trust is forged with an investment of time by the broker to gain comprehensive understanding of the company's business and its place in its industry, says Gary Pearce, vice president of the Risk Management Group at workforce solutions company Kelly Services Inc. in Troy, Mich.: “When you invest time in the relationship, you want it to last longer than a first date.” Discontinuity in team members on the broker side has caused him to switch in the past, he adds.

C. Nahua Maunakea, director of global risk management for IHS Inc., a global source of critical information and insight headquartered in Englewood, Colo., likens the risk manager/broker relationship to marriage, requiring time, attention and communication to prosper. Maunakea switched brokers in July 2014 as the result of a request for proposal (RFP) that his company requires every three to five years, and he says there was an adjustment period. But his risk management team and the broker's team meet weekly to review open items, giving both teams an opportunity to work through issues and raise questions. “It's all about good communication and managing expectations,” he adds.

Laurie J. Champion, chief operating officer and account executive practice leader for Aon Risk Solutions, Atlanta, recommends hiring the best broker for your industry, then educating the broker about your business' specifics. She advises risk managers to “introduce the broker's team to your executive leaders, take them to see the operations and let them work a shift.”

Matt Edelheit, senior vice president and department manager, risk management for Lockton Cos., finds that the best relationships are those in which brokers and risk managers trust each other implicitly, are accountable to each other, and are both working toward a common goal. He says that having a “line of sight” into the client's business is the best way to help his clients achieve solutions to their objectives. Without that perspective, it's difficult to provide any specific recommendations.

“Insist on and participate in effective strategic and operational planning for renewals and risk management projects,” Champion advises. She recommends that both the broker and the risk manager include actions, tasks and deliverables in that plan so that everyone can see how the pieces fit together. When there is a good plan in place, both the risk manager and broker teams can manage expectations and hold each other accountable.

Become a trusted adviser

In many cases, the most enduring relationships are those in which the broker acts as a business consultant as well as someone who crafts insurance coverage. “When you gain the trusted-adviser role, the relationship is most successful,” says Jeffery W. Colburn, managing director at Marsh Risk Consulting. In these types of relationships, the broker can respectfully challenge some of the client's assumptions or business practices and offer solutions that may better fit the client's needs.

When brokers anticipate their clients' needs or suggest new ways of doing things, they can substantially improve risk mitigation and loss control across the client's organization. “Don't just wait for me to ask you questions,” says Sarah Perry, ARM-P, risk manager for the City of Columbia, Mo. “Bring new products and coverages to me, and alert me to issues.”

In the same vein, risk managers have to communicate clearly when something isn't working and give the broker an opportunity to “fix” the issue. Brokers also have a responsibility to let the clients know if there are problems that need to be addressed. Pearce notes that he and his team have regular discussions with their broker to address what's working and what's not, and ask for feedback on what can be handled better.

The broker also points out changes the client could make that promote efficiency. Maunakea notes that his new broker reviewed statement-of-value worksheets that he had been using for several years, asked questions about why certain information was included, and showed what data could be left out without compromising the integrity of the information and its value to underwriters. “I appreciated the broker's suggestions on how to improve our process,” he says. “We're now more efficient at the renewal process.”

Consider what 'customer service' means to the client

The phrase “good customer service” is nearly always mentioned when risk managers are asked what's most important to them in a broker. But customer service is more than just shopping the client's account in the marketplace and finding coverage that meets the client's needs at the lowest price: It also involves how well the broker handles claims when there is a loss and how well the broker's internal processes function.

Seidenberg has found that some other brokers are good at the strategic side of the relationship, but their claims-handling process falls short because certain brokers operate different teams in silos, leading to miscommunication and delays. That makes it difficult to do business with the broker, and increases client frustration.

Customer service includes engagement in the client's entire risk management program, says Perry. Her broker participates in claims review meetings, making suggestions on how to improve the process.

Victor Parker, director of risk management for the City of Los Angeles, relies on his broker, Willis Group Executive Vice President Demetri Lembesis, CPCU, for advice on a wide variety of risk issues, from the city's zoo to its fleet of helicopters. The list of risk considerations for L.A.'s size is long and formidable.

Regardless of the risk size, however, “the client always comes first,” Lembesis says. Open and candid communication is key to maintaining good customer service. “It's important to explain what you're doing to help manage risk and, more importantly, why you are doing it.”

Make time for face time

In 2015, the world is so interconnected that where the broker is located in relation to the client shouldn't matter—but it often does. For example, Perry wants her broker within a couple of hours' drive time at the most so the two can confer in person when it's necessary or valuable. “Face-to-face meetings are still important,” she says, adding that face time helps both sides develop a stronger working relationship.

Seidenberg agrees that proximity and in-person discussion go a long way to cementing the broker/risk manager relationship, adding that such meetings help her connect with the broker's team on a personal level. Location was a concern for Maunakea when he considered a new broker: He and his team are based right outside of Denver and Detroit, while the client account managers are located in Texas. IHS is a global organization, and Maunakea often fields questions from employees in Europe or Asia at odd hours. “Thanks to technology, my account representatives are always accessible to me, despite the distance,” he says.

Maintain transactional competence

After the deal is concluded, Pearce finds that transactional competence helps maintain the relationship. Does the broker's administrative-services team issue policies accurately, provide certificates of insurance as needed, and process claims cost-effectively and efficiently? How well does the broker manage day-to-day operations? Some brokers can place more emphasis on their internal policies and processes than what best meets the customer's needs.

Perry agrees that ongoing customer service, especially in claims management and loss control, is vital. She has a service plan in place with her broker and they review it regularly, making modifications as necessary. “With a service plan I know what to expect, and so does my broker,” she says.

Lockton's Edelheit says that when employees are assigned to an account, they're involved in all aspects of managing it, from advising the client on what coverage to buy to claims processing and loss control. “Be present in the process,” he advises. This approach eliminates silos and ensures that the person responsible for underwriting the account is aware of all the client's concerns and potential issues.

Above all, be honest

Risk managers and brokers concur that honesty is critical to their relationships. If you don't know, don't bluff. On the broker side, pretending to have knowledge you don't have may cause risk managers to rethink the relationship.

“I respect my broker more when he tells me 'I don't know, but I'll find out,'” Perry says. She also appreciates the broker telling her that something isn't a good idea, but that he'll help her find the right solution for her situation.

Seidenberg has found in the past that some other brokers weren't completely honest with her because they didn't want to deliver bad news. She says she'd rather have the bad news up front, so she can manage expectations internally.

In keeping with the J.D. Power and RIMS study's findings, the risk managers NU spoke with were pleased with their brokers' performance and would recommend them to other organizations. Seidenberg, for example, says she “absolutely” would recommend her broker. Maunakea, Pearce and Perry also said they would recommend their brokers based on their strategic business advice and good customer service.

Parker in Los Angeles puts it best: “I would highly recommend my broker to other municipalities,” he says. “He works hard and earns my business every day. He also has the courage to give me the best professional advice and not tell me what he thinks I want to hear.”