Independent broker blog: fighting for scraps!

One of the biggest dilemmas faced by brokers looking to grow their commercial book is how much work they need to do to secure a risk and their chances of success.

This is not a new dilemma, nor does it appear to be getting any easier, but I have noticed a recent change in approach among my fellow independent regional brokers.

Time was when we’d be glad of anything, little scraps we could poach here and there in a bid to grow the book. We’d consider any risk or premium, we knew our place and, although they were only scraps, if you got enough you could make a good living.

What’s changed?

From our own experiences and those of other brokers I talk to, the change has come about because of the frustrations of chasing new business, only to be left with the feeling that it wasn’t a level playing field in the first place.

In my experience, you identify a target, attempt to contact the decision maker and get details of current insurance arrangements and renewal date. Nearer the renewal time you make a visit, gather details of the schedule of cover, complete a risk analysis and then retire to the office to make your presentations and chase results.

Alternatively, you get a distress call from a customer who’s just realised their policy is up for renewal and is calling everyone they can think of to get an alternative quote because the price has doubled.

Underinsured and underinformed

In both instances, and by definition, the client is usually woefully underinsured. They may well also have a misconception of the cover they need or hold – though if their existing provider were any good they would be on top of the risk and the client wouldn’t be looking to engage another broker.

You then spend much of your time trying to explain why they should be looking to increase their cover. In most instances, this is seen as a possible rise in costs, which puts you on the back foot or leaves you with the task of educating the client on their out-of-date schedule.

The frustration comes to a head when, after much time and effort, you present a solution tailored to the client’s needs and at your most competitive price, and then the client simply gets the schedule replicated cheaper elsewhere or their existing provider undercuts your price.

We can train ourselves and our commercial teams to sniff out time-wasters and to focus on trades and locations that present the best chance of success. We can also instil in them the importance of only dealing with the decision-maker. Yet none of these precautions necessarily guarantees success.

Bullish approach

Such frustrations have resulted in a more bullish approach from independents. More and more brokers are asking for some sort of commitment from the client before going on to waste valuable time and effort.

One approach has been to ask for a guarantee from the client that if the broker provides a solution at an acceptable cost, the client will agree up front to transfer the business on presentation of the insurance terms.

Another has been to ask for a deposit payment, again up front, as a contribution towards the cost of any policy purchased. Should the client choose to go elsewhere or stay with the existing provider, that deposit would be non-refundable.

Such reactions are from brokers who believe their valuable time and knowledge can add value to the clients insurance experience and in the long run save them money.

I don’t think for one minute that what I am hearing from fellow brokers is that we want an easy life. We know our place and recognise that we have to be in there fighting for all the scraps we can. However, I do believe that our guidance and advice should be recognised, and we can only do that by educating clients. I don’t think it unreasonable to expect some reward for our efforts.

Peter Smits is managing director of Ashbourne Insurance.