The conversations began innocently enough and with what we thought were admirable intentions. "Hi, I'm so and so. I'm an editor with Risk & Insurance®. We're calling to determine who the best insurance brokers are in the industry, and we were wondering if we could get your opinion."
What followed was usually two minutes of genuine praise with the risk manager on the other end of the line giving someone on our staff their top picks for brokers who are creative, understand the industry and who haven't forgotten what the words "customer service" mean.
But when we asked that same risk manager if he or she had any complaints about broker behavior, what followed was a deep breath. Then we got more than an earful. Sometimes we got it without even asking. And in some cases we got a much longer conversation with a list of complaints that sounded almost too flagrant to be true.
The litany included brokers not returning client calls; brokers doing end-runs and whining to the client CEO or CFO when the risk manager wasn't sold on their coverage plan; brokers acting more chummy with the underwriters than the client; and large unwieldy brokerage houses more worried about their internal political drama than giving their clients the attention they pay for.
Brokers not returning phone calls? Brokerage companies that ignore their clients' needs? These shortcomings are prevalent, the risk managers said--just not among their own brokers, of course.
What's going on here? Whatever happened to service?
ON A MISSION
That last question--whatever happened to service?-- is one we on the editorial staff at Risk & Insurance® set out to answer. We might not have lifted every stone, but we have gotten a decent conversation started.
That's how Mike Crowley, the president of the Glen Allen, Va.-based brokerage firm Hilb, Rogal & Hobbs looks at it, anyway. Crowley thinks a roundtable conversation about improvement of customer service in the brokerage world is needed. He doesn't agree with everything we heard, but he said he's hearing things himself.
For one, revolving doors at some agencies are leaving risk managers feeling like nobody knows their name.
"We don't want to churn talent, and we don't want to churn clients," said Crowley, adding he was planning to meet with other company executives in February to see what they can do to make sure HRH keeps the best talent available.
"I am not about to suggest that we are at that level and that I am satisfied. If you think you are at that level, then you are making a mistake," said Crowley.
A New York-based brokerage executive said she too thinks turnover is a "battle" but expressed an optimistic view of the outcome.
"Marsh is no different than many of our competitors," said Alexandra Littlejohn, a Marsh managing director. "We suffer the battle of turnover, we suffer some of the areas of keeping good people, but the more that we strive to make the experience of our clients better and better that will start to iron itself out."
On the topic of brokers not returning clients' phone calls, Crowley said, "If I ever got word that one of our brokers was not returning a client's phone calls, heads would roll, and you can quote me on that."
Yet it happens.
"I have seen it so many times in so many different markets with so many different brokers," said one risk manager. "You pay these people a bunch of money, and they don't return your phone calls. That will earn you a place on my 'Do not call' list."
When they do answer their phones, some firms only make administrative brokers available, but when it comes to the big shots, forget it.
"That's why we did the RFP," said the risk manager of a Fortune 500 aviation company who had just moved his business from one brokerage to another. "The person we saw was the administrative person and we loved them, but then when you try to get the higher-up person's attention, it just wasn't there."
Here's how a risk manager at a retailer put it: "At initial meetings they bring out their senior people and then you never see them again."
LoriAnn Lowery, a managing director and national practice director for Wells Fargo Insurance Services, thinks she may have some of the answers. The well-documented turmoil and turnover at some of the larger brokerages has gotten peoples' heads turned in the wrong direction.
"People are spending more and more time around everyone's desk trying to figure out who has got what job and who is reorganizing," said Lowery. She may be onto something.
"When you are constantly putting out fires you can't be anything but distracted," said Warren Mula, a managing principal with Chicago-based Aon Corp. who also serves as head of that company's brokerage group.
The confusion can be caused by employee turnover, or by the administrative headache spawned by the investigations of New York Gov. Eliot Spitzer when he was the state's attorney general, and by the changes in corporate financial reporting that have been legislated under the banner of the Sarbanes-Oxley Act of 2002.
Mula said all that paperwork is adding to the friction between brokers and their insurance-buying clients.
"The worst thing you want to do is to have the beginning of your client relationship resemble the closing of a house," Mula said.
But many of the executives reached for this story say all of that hand-wringing about transparency, when looked at in the right light, actually becomes an opportunity for risk managers and their brokers to take a closer look and be more creative about what they're buying.
"In prerenewal, transparency can become a tool," Mula said.
Another factor playing into risk manager dissatisfaction with brokers is that the position of risk manager itself has become much more prominent. Many risk managers are either C-level executives themselves these days or report directly to the chief financial officer or the CEO.
"On the front end, the risk managers are under more scrutiny and being held to a higher standard than they have been historically," said Don Bailey, the New York-based CEO of Willis, North America.
"It's a function of the times," said Lowery. "The higher the prominence the risk manager has in the company, the more scrutiny he is under. In turn, the more scrutiny the products he or she is purchasing is coming under."
Bailey said that scrutiny and prominence are great chances for the risk management community in general to institute best practices. "All of these are wonderful opportunities for the risk management community," Bailey said.
CAN BROKERS DELIVER?
Have brokerages have slipped behind in understanding the pressures their insurance buying colleagues are under, and that the same old way of doing business isn't going to cut it anymore? Wells Fargo's Lowery thinks so. She said the traditional good old boys' network of insurance buying needs a fat, wooden stake in its heart.
"The brokerage industry isn't based on who plays golf with whom anymore," she said. "Clients don't care if you take them golfing, they want you to be there for them when they need you to be there for them."
What about the complaint about brokers going over risk managers' heads and trying to woo the CEO when a renewal starts to go south?
"Instead of dealing with me or my boss, who was general counsel, this person wrote a letter right to our CEO. That was nasty, talk about burning a bridge. It was like, 'OK, you lose.' I mean who is she going to believe? It was bad form," said one risk manager we interviewed.
Aon's Mula said he's clear on the concept, although apparently there are some brokers out there who aren't.
"The nature of any business relationship is trust," said Mula. And he said the greatest threat to a client's trust in their brokerage is high turnover, an issue that everyone agreed is a biggie. But how successful are the brokerages being in creating cultures where individual brokers are understanding their client's needs and staying in touch enough to deliver that feeling of trust.
"Insurance is very intimate," said one risk management source who was hard-pressed to point out exceptional service on the part of any individual broker. "They have to know what you do, how you make your products, what your values are and what your history is. You become them."
For his part, Crowley said he's never satisfied that HRH is where it needs to be. Like other firms, HRH is working on initiatives that create buy-in from employees and make them feel like they are the architects of their own work environment.
Willis' Bailey said his company has conducted an associate survey that asked brokers how the company could best invest in its people.
Its conclusion? "People wanted to feel that we were investing in them, their careers, their professional development, and a significant amount of money has been targeted to that end," Bailey said. Overall, the executives we talked to for this story concede a problem exists out there. "I buy into everything that you have uncovered," Bailey said.
Many brokers, of course, don't see it that way at all. The head of a Washington, D.C.-based industry organization representing brokers and who isn't bound by the same degree of commercial diplomacy took a very different tone. "I think it's a lot of whining by a lot of non-professional risk managers," said Ken Crerar, the president of the Council of Insurance Agents & Brokers.
And this is what he had to say to risk managers that complain about broker service. "Quit complaining. You have got all the power. You've got all the cards in your deck. You can move the business anywhere you want."
WE GET IT
There were also some talking points that we raised that brokerage executives didn't feel are valid, or that appear to them to be anomalies. One is the notion put forth by risk managers that brokers are acting in the interests of the underwriters and not their insurance-buying clients.
"I don't agree with that at all" said HRH's Crowley. There has been too much focus on reform industrywide for that sort of fault to be anything but a relatively isolated occurrence, added Bailey.
"We don't see that a lot around here, and we have had a lot of education over the last three years over who we serve and a lot of it emanated out of the regulatory upheaval," said Bailey, referring to the bid-rigging scandals in which attorneys general in New York and Connecticut have accused brokerages of steering clients to higher-priced underwriters in exchange for higher commissions. Arthur J. Gallagher, Aon, Marsh and Willis all arrived at out-of-court settlements in connection with that issue in recent years.
Marsh's Littlejohn, who serves on the Quality Advisory Council of the New York-based Risk and Insurance Management Society Inc. said the biggest complaint risk managers have is also one of the most mundane: getting policies out on time.
"If there is one thing in the industry that clients would like to see solved, it is that problem," said Littlejohn. "But in order to get to that contract issued you have to go to process earlier. You need to be able to get the information to the underwriter in a more streamlined way."
To do that, Littlejohn said she and her teammates are using technology to create templates for renewals that take the burden of plowing through paperwork off of the brokers and their clients.
"One of the areas we have found to be important is at the beginning of renewal, we are taking as much of an approach as we possibly can to simplify through standardization some of the required exposure documents that we need to pass on to the underwriters," she said.
She said technology can also be used to create better data for risk managers on how their risks and insurance buying needs match up with others in their industry.
"I think industry-wide our risk managers would like to see benchmarking that is meaningful to them," Littlejohn said.
Rather then look at complaints about break-downs in service as an industry-wide dilemma, Crerar and others said that the increased scrutiny that risk management and insurance buying is getting is nothing less than a great opportunity for the broking industry to elevate its game.
"I think that the whole area of risk and risk evaluation has become much more critical and much more sophisticated," Crerar said. "The risks are changing they are becoming much more complicated. You are always out there looking at what the new risk it is its not surprising that it's being elevated to a much higher standard."
For their part, executives say their present and future concerns are focused on creating work environments that retain the best talents, making the new burdens of regulatory compliance more customer friendly, and reminding their employees who their customer is.
"If you think that you have reached a destination, then you are going backward," is the way HRH's Mike Crowley put it.
DAN REYNOLDS is senior editor of Risk & Insurance®. Associate Editor Erin Gazica contributed to this article.
February 14, 2008
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