Analysis: People power still pushes profitability

In the fast-paced environment that is the modern insurance industry, it is easy to lose focus on what it is all about.

Our profession was built on a firm foundation of interaction between people, whether between insurance provider and broker or broker and client.

The industry has undergone many changes since its birth in a London coffee shop in 1688, with the advent of online systems, the internet, social media and smartphones to name a few.

We now find ourselves in a position where relationships have never been more important nor, perhaps, more neglected.

For a recent study, Macquarie Bank queried 230 insurance brokers across Australia. The main thrust of the report was: “Firms that grew their revenue in the past financial year have done so through their own endeavours, with the top two contributing factors being increased sales and marketing activity.”

The study also stated “existing relationships are cited as the number one factor for insurance placement strategy (66% [of respondents])”.

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With this in mind, it is troubling in recent times that the role and importance of the “front-person” in our profession is often questioned cynically. The people creating new relationships – usually referred to as Sales and Marketing Managers, Business Relationship Managers or Business Development Managers – have often been described as nothing more than ‘post-boxes’ or ‘brochure delivery managers’.

This seems to expose an issue within our industry – put simply, there has been an influx of inexperienced or under-trained development staff who have done little to improve or at least maintain the importance of these roles.

Given that development staff are quite often the keeper of broker business relationships or the first port-of-call (particularly for emergencies), this role is pivotal to insurers and agencies alike.

At the very least, brokers should expect competent development staff to provide:

  • Comprehensive information on an organisation’s products in clear terms
  • A clear understanding of the appetite of the risks they are prepared to write and, within those risks, which are most competitive
  • A clear understanding of what does not fall within said appetite and why
  • Thoughtful questions regarding your own business growth model and sales initiatives
  • Solutions to any difficulties encountered working with your insurance provider
  • Access to online systems, as well as training and tips
  • Claims examples and policy comparisons for complex areas of insurance
  • CPD points for presentations
  • Support to execute ideas for new products

These are just some of the advantages organisations that foster a focused development model must deliver to their broking community. The challenge facing those who pound the pavement is making sure they value-add at all times but particularly during crucial moments of truth.

Of paramount importance here is communicating effectively with brokers.

Ways forward

Brokers make it clear service is key. The advance of online systems is
a good example of this.

Progressive companies have invested time and money to develop systems to give brokers the ability to obtain quotes and bind policies 24/7. Many brokers now understand that optimising operational efficiencies is vital to running a lean and profitable brokerage.

Utilising online systems is one way that our industry can address the inefficiencies of how we have carried out business in the past.  Experienced development staff should be encouraged to take steps to make brokers feel more comfortable with using online systems. This may require test-driving the system with risks that are suitable, either one-on-one or in groups.

Not all brokers are advocates of online systems, and this may be for several reasons, most of which centre on the type of risks within their book of business.

Common sense applies here and brokerages with clients that have heavy underground mining exposures, complex liability risks or property risks with high hazard materials such as expanded polystyrene need an underwriting specialist.

Development staff need to ask the right questions and be prepared to transact business the traditional way if the situation requires that approach.

The real issue here is that brokers deserve to be given the choice. This is never more relevant than when choosing with whom to do business.

Denver Van Gramberg is the Marketing and Distribution Manager at Brooklyn Underwriting.