The Economy Impacts Broker Relationships

The economic crisis is changing how medium sized commercial insureds view the purchase of insurance, and this change is having an impact on their broker relationships.  Not surprisingly, value, a euphemism for price, is becoming more important and broker relationships less important, or so says a recent study.

Greenwich Associates has released the 2008 Middle Market Insurance Research Study.  The press release for this survey is hard to find on their web site - try here or here - but summaries are available from Insurance Journal (here) and National Underwriter (here).  Key points:

• The results … reveal that as the economic downturn set in over the past 12 months, companies began de-emphasizing broker customer service in favor of a much stricter focus on obtaining the best value and price in their insurance purchases.
• In past years, customer service ranked as by far the most important factor in middle-market companies' assessments of their insurance brokers. The results of this year's analysis reveal that companies are now giving equal weight to three factors: price, value and customer service quality.
• Executives of these companies must feel that they are getting high quality coverage and service for the best possible price, and they must feel that their brokers are working as their true partners. Any broker that fails to deliver on these counts is at risk.

One of our clients is living this every day, and we hear from them how important saving money has become.  This client excels at smaller commercial and personal lines insurance business generated with a unique marketing approach.  This client combines a message of quality coverage with the lowest price, and they deliver (and measure) this.  They have built an internal system which strives to provide the best value for their customers, and it is showing in their new business metrics.

Couple this trend with, maybe, some early signs of a tightening market and there is added turmoil coming.  This is a risky time for insurance agents and brokers satisfied with the status quo, and a time of significant opportunity for innovative and aggressive organizations.

Brought to you by Tennant Risk Services.

Comments

[insurance sales]

In the past three months I have seen many agents retention rates dramatically decrease as clients are cutting corners an tightening their belts, allthough the numbers of price buyers for short term products has dramatically risen. There are just not as many value based buyers out there right now, and these used to be the longest term customers.

[Chris MacPherson]

This is becoming the rule rather than the exception unfortunately. Insurance brokers/agents, in their downward spiral to secure clients push price more than anything. We've become a commodity, now more than ever. I'm afraid the term "professional" will become obsolete in our business.

[Business Protection man]

Yet more bad news for 2009 but if you can get through this year with all business relationships intact then the future will look very good.

[Jerry]

The economy has impacted everyone in one way or another. In times like these Agents need to keep on top of it for our customers and do what we need to do to continue being seen as the best option for our clients needs.