Insurance brokers are thought of as trusted advisors. Being an important point of contact between businesses and the insurance industry, brokers look out for the best interest of their clients and are depended on to ensure that their client’s businesses are protected.
But what does it really mean to be a trusted advisor? This role, as suggested by Maister, Green and Galford in their book, The Trusted Advisor, is first about gaining the confidence of clients. For brokers, there’s no better way to do so than to provide something of value.
The mid-market has long been a coveted market for insurance brokers. Being a segment where substantial growth is possible, it’s worthwhile to understand how to develop meaningful, long term relationships with these clients.
So how can brokers provide value to mid-market companies? Well, value for them is the protection of assets in the pursuit of growth. It’s the optimization of uncertainty to maximize opportunity. It’s the anticipation of potentially negative events to protect future ability to operate and create shareholder value.
Sound familiar? It should! The value is risk management!
Simple enough, right? Well, not really. The complication is that the mid-market doesn’t really know that risk management will help them to improve their short term and long term business operations in such a beneficial way. Put on top of this the fact that risk management solutions built for the mid-market have been largely non-existent and that means brokers have quite a bit of work ahead of them to develop trusted relationships with these clients.
I recently asked three questions of the LinkedIn community that brought about some important insights:
- Does the mid-market want/need risk management?
- Should brokers be doing more risk management for clients?
- Is insurance a commodity?
Summarizing the community’s responses, it was seen that the mid-market would employ risk management if they understood it better, if the return on investment was clearer, and if they could undertake risk management without interrupting the operations of their core business. Respondents showed interest in brokers offering more help to them so that SMBs can see the value of risk management and find solutions appropriately matched to their needs.
There is indeed an interest and a need that SMBs are willing to invest in under the right conditions.
How should the industry respond? First, insurers can provide risk management resources to brokers to support their work with mid-market insureds. Having the right materials to provide assistance to mid-market clients will mean being able to play an important role in their risk improvement. The offering of risk management services can help educate clients and add value to their relationship with their broker. For brokers, a focus on risk management means the broadening of their service offering, increased revenue potential and the ability to attract and retain clients.
I think a greater emphasis needs to be placed on innovation in finding and creating solutions made to fit the mid-market as opposed to trying to make the high end solutions fit. With the right solutions, insureds will see the direct cause and effect between good risk management and return on their risk management investment. Attraction and retention of clients for brokers, decreased costs and increased return for SMBs: risk management in the mid-market is a win-win situation.