What product and services do insurance agents and brokers, whether retail or wholesale, provide to their clients? Many practitioners define this narrowly – the product is insurance, the service is advice, and sell accordingly. However, some organizations have taken a wider perspective, and try to add additional value. The classic example in the specialty lines business, for an insurer, has been Hartford Steam Boiler Insurance Company, a company which provides both insurance and the expertise to significantly reduce catastrophic losses.
A recent article in Business Insurance provides a retail agents perspective on providing added value through the provision of risk management services (see here). Anderson Baker, of Gillis, Ellis & Baker Inc., advocates providing loss prevention and risk management services in order to differentiate your agency and to assist clients in preventing losses and reducing loss severity. Their experience would indicate that this can be a successful strategy in differentiating an agency.
Our own experience indicates that differentiation is an important component of a distribution strategy. We have seen a number of retail agencies execute this extremely well. Three examples (to remain nameless) come to mind, each of which rely on a specialization strategy to build the value component:
- An agency specializing in one segment of inland marine
- An agency providing highly technical risk management services in a segment of the recreation insurance business
- An agency underwriting a highly specialized class of real estate professional liability insurance
Each of these examples have succeeded in building significant market shares in the chosen specialty areas through specialization and the provision of value added service. You will be able to name many others.
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