Consultative Broker Briefing - V. IV, No. 16 - The Lost Art of Negotiation

The Consultative Broker™ Briefing
Volume IV, Number 16
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2002

"The Lost Art of Negotiation"

The prolonged soft market dulled many of the selling and negotiation skills that successful brokers now require. Throughout that fifteen-year cycle, a primary negotiation tactic was to submit a risk to several carriers and “spreadsheet” the responses, thereby playing one carrier against another and obtaining the most favorable terms and prices. In today’s marketplace that tactic is obsolete and in no one’s best interests (it never was!)

Like the City of Atlantis, the Art of Negotiation has been lost to us for many years. Consultative Brokers are re-discovering the skills required to effectively negotiate win/win agreements. Here are some things that must be considered in a successful negotiation:

The Importance of Time. As any good negotiator knows, time is an extremely important factor. When given enough time, we can resolve problems. When give enough time, we can avoid most crisis situations. You must insist upon time from your carriers. Your largest renewals must not come down to the eleventh hour.
The Invisible Man. Have you ever negotiated a renewal only to be told that a “higher authority” needs to pass judgment? This is the Invisible Man. The problem here is that you cannot negotiate with the Invisible Man. Therefore, in the beginning of the negotiation, you must ascertain who else will need to be in the room for the final negotiation.
The Highball/Lowball Offer. Never respond to an offer that is outrageous. In some cases, amateurs will respond with the “Let’s split the difference” technique. In this case, all we have done is legitimize the tactic and started the negotiation from a ridiculously high position. The best answer is, “You will have to do better than that.”
The Noise of Negotiation. There is noise during any negotiation. An example is all the noise concerning the state of our industry. Because of it, we sometimes assume the worst. When we listen to the noise, we become unfocused to the needs of our clients.
The Concession Nibbles. In many cases, while the big picture may appear bleak, a deal can be improved through small concessions. For instance, while the premium may increase, we may be able to help reduce costs through payment plans, loss control, or even broadened terms. In a negotiation, these concessions should always be sought.

The most important part of a successful negotiation is that it be a win/win deal when completed. Anything else will not have lasting consequences. This is only accomplished through having a relationship with all parties. Every negotiation should serve the long-term needs of all participants. That’s how Consultative Brokers like you continue to prosper through all marketplace cycles and re-discover the Lost Art of Negotiation.

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

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Thank you.
C.R. Ekern & Company