It is certainly no secret that our industry is absolutely rife with competition, and with prices going up nearly continuously, quoting until you find a good price is getting less and less consistent in landing customers. Therefore, you’re left with two options when trying to grow a book of business: keep at the grindstone until things work out, or work smarter. My brokerage’s methodology of working smarter is to provide services often associated with outside partners or a DIY methodology: risk management.
Be proactive, not reactive, with risk management
Ask most insurance agents what they do, and you’ll hear some version of “I help businesses get the coverage they need.” That’s fine, but coverage is reactive. It responds to loss. Risk management, on the other hand, is proactive. It’s the practice of helping your client prevent those losses in the first place and, when that’s not possible, making sure they’re ready to handle them with minimal disruption.
Incorporating risk management into your service model changes the entire relationship with your client. Instead of being seen as someone who shows up once a year to go over a renewal, you become a strategic partner. You shift the conversation from “How much did it go up?” to “Here’s what we did this year to control costs and reduce exposure.” This shift in conversation alone can assist with retention, as instead of just forwarding the (usually bad) news from the carrier, you can provide tangible areas of improvement and show that you’re doing something to assist with costs.
Benefits of risk management
Here are a few of the ways a proactive risk management strategy can benefit both your client and your agency. These examples are with commercial clients, but you could apply this to personal lines as well.
It helps your client lower their total cost of risk
First and most obviously, risk management helps your clients save time and money, not just on their premium, but on indirect costs. For commercial clients that could be things associated with workplace injuries for example, like lost productivity, retraining, OSHA fines, and employee morale issues. Clients who manage risk well have fewer claims, more predictable premiums, and fewer headaches when renewals roll around.
It makes you more valuable as an agent
A client is much more likely to stay with an agent who regularly brings ideas to the table, not just documents. If you can help them implement a return-to-work program, get their OSHA logs filed correctly, or clean up fleet compliance, you’re doing more than just selling insurance and collecting a steadily increasing payment.
It positions you better when prospecting for new business
Everyone’s quoting the same carriers. Everyone has access to similar markets. But not everyone shows up talking about fleet safety for auto coverage or how to avoid lost-time injuries. When you lead with risk strategy, you’re speaking a language that resonates with owners, CFOs, and HR leaders who are tired of just renewing a policy and hoping next year goes better.
Implementing a strategy
So how do you actually get started with a risk management strategy? A lot of agents make the mistake of thinking risk management means hiring a safety consultant or trying to master OSHA’s regulatory code overnight. That’s not what we’re talking about.
Educate yourself and the client
The first step is education for both yourself and the client. Understand the client’s business. Ask them what their claims process looks like. Ask how they handle an injury when it happens, who fills out the forms, how they get people back to work, and whether they’ve ever had a visit from OSHA. Additionally, some carriers provide built-in risk management services. Give those a look and see what you can use for your client.
Build a basic risk profile
You don’t need a complicated system or 20-page report. Just identify what exposures they face, how they currently address them, and what obvious gaps exist. Most businesses aren’t short on effort; they’re short on direction. If you can help them connect the dots between day-to-day operations and insurance costs, you’ll have their attention.
Think long-term
The strategy piece of risk management is where agents can really separate themselves. Think beyond the renewal. Set expectations early that you’ll be reviewing their experience modification score, loss runs, and claims trends throughout the year, not just when it’s time to get a new quote. Help them track training initiatives. Offer to facilitate safety committee meetings or assist with procuring trainers.
If a client sees you as the one helping them reduce claims and prevent disruptions, they’re going to see your compensation as earned, not just another line item on their expense sheet. Make sure you tailor this process to the client as well; a printing shop won’t have the same needs as a metal components manufacturer.
Mistakes to avoid
Now let’s talk about what to avoid, because there are plenty of pitfalls. The first is trying to sound like a risk management expert before you’ve actually done the work. Clients can sniff out vague advice. If you’re not sure about something, lean on your vendor relationships or underwriting partners. Don’t oversell, but be confident that you know more than the average customer about how carriers operate and what they like to see.
Another common mistake is turning risk management into a bunch of nice-sounding ideas with no action plan. If your recommendations don’t translate to something the client can implement, they won’t do anything with it, and they’ll probably forget why they even needed you. Always focus on practical, attainable steps: build a claims reporting procedure, create a return-to-work checklist, get their safety plan into writing.
Additionally, adjust based on what the client is capable of handling. Some businesses can plug in a risk management plan without issue; others take years to implement. Keep in mind that doing some risk management beats doing none, and even if it takes time this is a worthwhile endeavor for any business.
Shift the narrative with clients
At the end of the day, risk management isn’t about being everything to everyone. It’s about being the kind of agent your clients remember when things go right, not just when something goes wrong. You want to shift the narrative from damage control to cost control. While doing so, you want to provide value so that your role is irreplaceable.
If you can become the agent who knows how to reduce loss and make insurance easier, not harder, you’ll never have to worry about losing business to someone with a cheaper quote. At that point, you’ve moved beyond selling policies. With this in your pocket, you’re helping clients build stronger businesses. Price alone can’t beat that, and the effort put into risk management can lead to a relationship where your clients won’t even bother looking around come renewal.
Author
Dean Bowen
Patriotic Insurance Group
Chester, NY
