Consultative Broker Briefing - Surviving the Price Tsunami

The Consultative Broker™ Briefing
Volume VII, Number 6
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2005

Surviving the Price Tsunami

As most of you know by now, the soft marketplace will soon be upon us like an unrelenting Tsunami. As the constant reduction in prices sweep across us, we are all facing a fear of uncertainty. Where will it end? Which of my accounts will be attacked on price? How do I keep my head above water when the competition is roiling around me sucking me into the whirlpool of price? How do I stay in front of it?

These are the questions that many of us are asking ourselves on a daily basis. Experience has shown us that once we start reacting to price, we need to constantly be on guard as the marketplace changes daily. Where will our next surprise be?

How do we build a bulwark around our clients to protect them and us against the coming raging waters?

The answer . . . you don’t. That’s right, you don’t. In fact, an astute Consultative Broker takes the client by the hand and leads them into the ocean. They possess the skills necessary to lead clients across these treacherous waters.

First of all let’s address how amateur brokers and agents face the soft marketplace. They instruct their staff to send every renewal indiscriminately into the marketplace. They see this as the best defensive position. They instruct that this be done 90 days in advance to protect themselves against other brokers. After all, they figure if we blanket the marketplace, we will not be at the mercy of any other brokers or our own carriers. Then, they wait until the last minute to deliver the renewal, just in case they need to flush out any other competitors.

Malarkey! Bull Poky! Balderdash! What this weak strategy pre-supposes is that they can’t trust their own clients. Also, that their firm has a unlimited overhead that exists not to serve clients, but to protect the organization against them! The agents and brokers that take this course of action have confessed to one of the cardinal sins. They do not have the ability to exercise Broker Control and they expect the marketplace to do it for them!

Consultative Brokers approach this issue from a completely different angle. They know that Broker Control gives them a platform by which to help their clients and themselves prosper during these uncertain times of falling prices. Here is what they do:

They present Stewardship reports at the 180-day mark. During these Stewardship Reports they make certain that the client understands their impact on costs. These costs are irrespective of the price of insurance. Also, they provide the client with a full briefing of the status of the marketplace and the expectation of falling prices. They are not afraid to provide these to clients because they know that if they don’t discuss it, someone else will. Also, they are fiercely jealous of their position of as a Consultant.
They discuss the account with the current underwriter at the 120-day mark. In order to do this, they understand the importance of honesty and an impeccable reputation in the marketplace. They have a frank discussion with the underwriter concerning what sort of expectations they have regarding renewal pricing and terms. While they understand that this discussion is not a renewal proposal, they expect the carrier to give them the best preliminary indication possible based upon the current marketplace.
They discuss the incumbent carrier’s preliminary indications with the client at the 100-day mark. Wow!! What a concept. These Consultative Brokers are not afraid of disclosing everything they know to the client. They take them backstage. They see the renewal exercise as simply a project. One that involves the client on an equal footing with the broker. Then they ask the client the most important question of all. The one that reduces the Tsunami from a towering wave to a gentle ripple. “Based upon what we now know, would you like us to begin the renewal process with the current carrier, or execute a marketing project on your account?” They let the client make the choice.

This course of action is dependant upon several key factors. A complete trust between broker, client, and carrier is required. The ability to communicate a value proposition based upon reduction of client costs is needed. In addition, a broker must recognize that changing marketplace conditions have always been a part of this industry. When prices rise, they are not to blame. When prices fall, it is not because of them either.

In the next edition of the Consultative Broker Briefing, we will discuss the keys to exercising Broker Control during the marketing process. We will explain how to communicate with the client and the carrier. We will show you how seasoned brokers move the renewal through these turbulent rip tides, without falling victim to the roaring Tsunami of price. If you keep reading, we will keep writing.

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

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Consultative Brokerage® Techniques are utilized by agents and brokers across North America in the development and retention of upper middle market revenues. The Consultative Broker Briefing is delivered electronically free of charge to selected agents, brokers, and other insurance professionals across North America. To subscribe to The Consultative Broker Briefing, please click here.