The Consultative Broker™ Briefing
Volume V, Number 7
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2003

Lock The Back Door!

I was with one of our regional brokerage clients this week and heard a disturbing report. It seems that one of their major carriers recently approached them and promised a renewal increase of only 8% in exchange for pre-renewing a key July account. OH NOOOOOO! We have seen this road show before!

At the end of the last hard market, carriers used this technique to hang on to the premium increases they had achieved. Once they started offering pre-renewals at small increases, their competitors offered renewals at reductions. With this technique, the rapid slide to a soft market began.

As you know, there are a lot of angry clients out there. Many of these will listen to other brokers once the price competition begins again in earnest. As a Consultative Broker we cannot let this happen. If we wait until the horse has left the barn, it will be too late.

How you approach your July renewals this year will have a huge impact on your income next year. Many pundits are beginning to believe that this will be the last year of the Platinum Age for insurance brokerages (windfall profits from premium increases.) So, what happens if the marketplace changes in the next 12 months? Your July 2004 renewals will reduce, as will your income!

“So what?” you say. “Our income will remain stable this year.” Of course it will. However, your income next year will depend entirely on how you handle this year’s renewal. It is critical that from this point on you “lock the back door” on all your key accounts.

Here are the ways that successful Consultative Brokers are locking the back door on their largest accounts:

Their renewal presentations include ways that their firm has been of value over the past three years. These presentations must include a number of issues besides simply providing insurance at the best rates available (and frankly, the client doesn’t agree that they have been very good!) If you tie yourself to the insurance, you may become the messenger that gets shot.
They are doing Stewardship Reports on their largest accounts. These are done six months in advance of the renewal and are used to provide the client with valuable marketplace information. It is better that they hear it from you, rather than from one of your competitors.
They are constantly building and testing relationships inside of their key accounts. These relationships are built at more than one level and are “Institutionalized” inside their firms. It is the strength of these relationships that will provide them with additional protection once the other broker inevitably “comes a knocking.”

Many of us have experienced tremendous prosperity over the course of the past several years. This has been achieved in spite of the difficult marketplace conditions. It will now be necessary to “lock the back door” in anticipation of the changing competitive landscape. The Consultative Brokers who do it correctly will continue to prosper no matter what the marketplace does in the future.

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

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Thank you.
C.R. Ekern & Company