By DAN REYNOLDS, senior editor of Risk & Insurance®
Mark Twain is credited with saying, "Any man who has held a bull by the horns knows a thing or two more than a man who hasn't," or something along those lines, and therein lies a lesson in choosing your insurance broker.
The facts are that by their very size and the scope of their business expertise, large brokers with international footprints will be able to take you places a smaller, regional broker will not be able to take you. And this last bit may be the most telling: At least not in the time that you need them to take you there.
When it came time to arrange for coverage of an international risk or a complex financial arrangement that required working relationships with underwriters in Bermuda or London, the smaller broker often just can't get it done.
This is not an argument against smaller, independent brokers in general, because to make an argument against smaller brokers in general would be to ignore the great advantages they can provide in certain circumstances. Yes, they are capable of greater intimacy with your account. Yes, they are capable of giving you tremendous customer service. And yes, you could have a long-standing relationship with them and a level of trust you won't have, at least initially, with a new broker.
But there are also brokers who despite the fact that they work for an international brokerage are capable of providing that very same level of entrepreneurial knowledge of a business and responsive customer service. Granted, they might not sleep much, but that's what they choose to do and what they get paid for.
And if unwinding the insurance program of a large corporation to cover a spin-off company unfolded slowly, staying with your small brokerage and utilizing its network of small brokerages might work.
But guess what? Business doesn't work that way and insurance doesn't work that way. The people who make the merger and acquisition decisions that they feel will produce the best results going forward are going to close that deal as soon as they possibly can. And it will be the job of the executive in charge of insurance or the risk manager to work that out. And he or she won't have time to wait for their regional broker to develop the skill set or the experience to get the deal done on time.
Sure, relationships are important, but relationships, like contracts, were made to be broken. And any business man is a fool who holds onto a working relationship for longer than it serves the interests of himself and his stockholders.
(Read Managing Editor's Cyril Tuohy's Point, "Maintaining the Relationship," here.)
February 17, 2011
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