Brokers Build…

Insurance brokers are facing challenges throughout the country. In Alberta, pain is especially acute. Insurers, hamstrung by government imposed rate caps, are frustrating insureds with making access to coverage difficult. From increased rates, reduced payment plan options, to more burdensome application processes, headaches are being handed out like candy at Halloween. The pain felt by insureds is pushed back to brokers caught in the middle. Challenges in staffing are increasing as broker turnover accelerates and some are just departing the profession all together as the burdens seem to outweigh the blessings.

Perhaps we can take a few minutes to celebrate the value brokers make to their customers and regional economies. I’d like to offer two personal anecdotes that support the idea that being an insurance broker matters and offers the opportunity to make significant positive contributions to others. Businesses benefit from a skilled insurance broker by being able to both operate by distributing risk they face as well as to help them market their products.

I led a business start up more than 20 years ago through which we acquired some technology from a US military subcontractor that we then brought back to Canada to implement. The business was a manufacturer of a specialized chemistry of lithium batteries used in various oil and gas applications. The product itself used hazardous materials and was capable of being dangerous. Moreover, these batteries were used in highly hostile physical environments. There really was no other company doing this type of manufacturing in Canada and only a handful in the world. As we began to set up our facility in an industrial park in N.E. Calgary, we needed to obtain insurance. We had invested almost $2,000,000 in equipment, technology, and materials. We could not afford the loss of this investment. Moreover, we needed general liability insurance as well. Being up to our eyeballs in alligators, giving thought to Insurance wasn’t top of mind. To suggest it was an afterthought would be too kind.

We were referred to a commercially oriented brokerage by one of our shareholders. Our broker took the time to learn about our business and was able to communicate our needs to at least one insurance company. We met with an underwriter who toured our facilities and we acquired the coverage we needed. Without this coverage, we would not have been able to move forward with our business. Once insurance was in place, we didn’t give much thought to it. It was an expense we grudgingly paid feeling there was no choice but to have it.

Sometime in our second year of business we had an incident. A poorly sealed container of scrap/waste materials began to smoke as a result of air mixing with the chemicals contained therein. One of neighbors noticed and called the fire department. Firefighters arrived in short order and were even faster to break through the windows of our rear bay doors then used their hoses to attack the smoldering embers resulting in a full fledged fire in our warehouse. The story made the news, a bunch of firefighters were sent to the hospital, and things looked ugly. This was more so the case in light of the timing of the incident. It occurred just a week or so after the tragic events in New York city in 2001. In spite of the furor fostered by local media, no one was seriously hurt and the physical damage to both building and equipment was actually quite minor. Our insurance broker and adjuster were with us, on site, stick handling this situation from the earliest moments of this circumstance. We suffered only a half day of down time. Our broker was essential to our ability to smoothly manage this crisis as was the insurance coverage in place.

Our insurance broker was a key part of helping us both establish our business and manage a crisis. Broker Builder also benefited (and continues to benefit) from the expertise of our insurance broker. When we began almost fifteen years ago, insurance was, once again, a crucial piece of our start up puzzle. Initial quotes we received were very expensive for a small, start up. The cost was deep into five digits. It seemed more like a US Zip Code than a serious quote. We didn’t really have any revenues yet. We were a pure start up trying to get somebody to nibble at our business service. Our customer base was (and is) insurance brokers. Being somewhat risk savvy, a common question we encountered was “do you have E&O coverage?”. We didn’t have an answer in our early days outside of “we’re working on it”. We were caught up in the vicious circle that many start ups inevitably face. We couldn’t get prospective customers to give us a chance or take us seriously without certain insurance coverages in place, while at the same time we couldn’t afford the needed insurance coverage because we didn’t have customers to help us generate revenues. What to do?

The Catch 22 situation was untenable as was our dwindling financial resources. Absence of insurance was no longer an after thought, it was a focal point for our efforts. We needed to get serious about sourcing a solution. In all the aspects of our business planning and efforts to date, giving thought to insurance was definitely not a top item. We did a better job of detailing what our business was, we undertook efforts to detail risks and vulnerabilities in our workflows, we reviewed these with insurance brokers. We sought to communicate with greater clarity who we were and what we were doing to be a good risk for prospective underwriters. With this additional context, our insurance broker who was a principal in a brokerage that was one of our early customers was able line up a policy sufficient to meet our needs for about 1/10 the cost of others quoted. We were quite happy to both commit to and pay that insurance bill. We have remained customers with this brokerage (as they have of us) for this entire period.

Independent Insurance Brokers are key parts of the economy by helping small businesses be in a position to take risks. Thanks for doing what you do. Without insurance, entrepreneurs simply couldn’t take on the risks needed to go forward with their business ideas. Insurance is the essence of any economy. As soon as people are able to work to get things – houses, cars, personal property, they need to be able to protect that stuff from loss and damage. Insurance equals progress. Brokers that seek the most suitable insurance option for their clients serve a vital purpose.

From a Harvard Business Review article: “A growing body of research shows that end users—customers, clients, patients, and others who benefit from a company’s products and services—are surprisingly effective in motivating people to work harder, smarter, and more productively.” The article is well worth the 10-15 minutes to read and offers concrete examples of benefits to helping staff see how their efforts make a positive difference to others as being a motivator.

One example involved a call center at a University tasked with calling alumni in order to seek donations to the institution. Where call center staff were periodically provided with details where they learned about the direct, personal benefits someone received as a result of being beneficiaries of funds raised by the staff’s very efforts, the staff’s engagement increased substantially. This engagement fueled efforts which resulted in contributions 171% higher relative to the same staff at the same institution in a prior period.

As the article notes, “By serving as tangible proof of the consequences and value of employees’ efforts, end users … can be important allies for leaders in motivating and inspiring their workforces.” It seems safe to suggest that your brokerage likely has many stories similar to the two laid out above where your brokers have made a meaningful difference to your customers. Amassing an arsenal of these types of anecdotes to be used as fodder for motivational fuel from time to time is encouraged. Moreover, celebrating staff that are part of these stories is sure to keep these ideas front of mind. The intent is less to use as testimonials or references for external marketing, but more to build a sense of purpose and meaning into the function brokers serve. What you and your staff are doing day in and day out is important and matters. Taking time to reflect on this reality from time to time will help refuel and further engage us in our work commitments.