We aren’t technically in a recession (that we know of), but it’s not looking good! Troubled economic times make your clients and prospects price shop; that increased competition is the icing on the cake for brokers who are also struggling with the economy. A slight change in approach can go a long way towards growing brokerage revenues and weathering the economic storm.
I once gave a presentation to a large regional brokerage on risk management, how they could use it to help them attract and retain clients and, of course, make more money. Everyone in that room nodded at the right time, laughed at the right time, and said all the right things – my presentation seemed to be on track. However, when I was done, a senior partner in the room piped up and said, “That all sounds really good, but we make money by selling insurance policies.” That was back in 2004 – things have changed since then.
Now, risk management is a value-added service that is often considered essential by insureds. I’ve discussed this topic in many posts before, including the post Using Risk Management to Increase Brokerage Revenue.
As a trusted advisor, your clients already expect you to help them manage risk. In fact, many of your insureds, if asked, would tell you that their insurance broker is their risk manager. You already have their confidence in dealing with risk, so why not take it to the next level?
10 Ways Risk Management Will Increase Brokerage Revenue:
1. Satisfy your customers
Make no mistake, in these especially trying times, risk management has become the single most critical issue in the mindset of your target customer – if you don’t offer your customers a more robust and personalized service, by finding ways to minimize the cost of risk, they will find a broker who does.
2. Enhance customer relations
By identifying potential areas of risk, and helping to find solutions, you will most certainly develop stronger customer relationships.
3. Garner more attractive rates and terms in the market
By making your clients best-in-class risks, you will be better equipped to make the case to insurance markets that your customers deserve preferential rates and terms.
4. Attract new clients
Offer potential insureds risk management advice and support, in addition to standard insurance products. If you are going head-to-head with a brokerage that provides value-added services, such as risk management, you can level that playing field.
5. Retain clients
Brokerages that fail to implement risk management as a value-added service will lose clients to a broker who does. Risk management is rapidly becoming a core competency for value-added brokerages.
6. Harness a competitive advantage
Insurance brokering is a very competitive market and clients are becoming ever more informed about their options. Providing risk management support to clients will generate a competitive advantage for your firm, over those brokerages that do not.
7. Generate higher CPC
Clients with enhanced risk management show improved loss ratios in the long run, resulting in a better book of brokerage business.
8. Mitigate your professional liability risk
Clients, these days, are expecting more and more from their insurance brokers. By working with clients towards risk improvement, brokers can enhance their understanding of the risks involved and be better equipped to provide advice to customers, resulting in fewer E&O claims.
9. Up-sell products and services to your clients
A broker who clearly understands his client’s risk exposure is more likely to assess gaps in coverage, thus identifying and providing additional insurance products to adequately protect the customer.
10. Design a risk-management profit center
Many brokerages have already developed risk management expertise in house, and are using risk management software to create new revenue; risk management consulting services have proven very complementary to insurance products by generating a new revenue stream for these companies.
In today’s unforgiving economic climate, and in a market where too many brokers are narrowly focused on selling standard insurance policies, risk management emerges as the key to product differentiation. Your customer profile has changed dramatically; today, more than ever before, they are looking for value and return on their investment.
Stock markets tumble as corporate instability and sovereign debt dominate the headlines; silver and gold are losing their lustre. However, these modern events play well into the hands of insurance brokers, provided they can seize the opportunity. In these troubled times, risk management tools can provide insurance brokers with the competitive edge they need to grow business. By bringing risk management services into the product mix, brokers can grow sales within their existing services, while developing a risk management profit center.
Have you used risk management as a value-added service?
Or is it something you’re considering? Share your story in the comments below!
Don’t forget to subscribe to our risk management blog to learn more about how risk management can add value to your brokerage.