10 smart strategies for building strong risk manager/broker relationships

“I know I’m not my broker’s only or biggest client, but the team makes me feel that way.” That’s the response you get from Lori Seidenberg, ARM, RF, senior vice president, risk management, for HCP Pacific Asset Management LLC, when you ask her about her relationship with her broker, one that’s lasted for seven years. “My broker is there for the bad times and the good.”

Seidenberg’s comments echo those voiced in a recent study of large business commercial insurance customers conducted by J.D. Power and RIMS, published in December 2014. The study found that most risk managers want to have a strategic relationship with their brokers, not merely purchase insurance coverage through them. The study also found that the most important factor in customer satisfaction among risk professionals was how easy it was to contact the broker, followed by the broker’s ability to understand the customer’s needs.

National Underwriter interviewed a cross section of risk managers and brokers to get their views on how to build a strong broker relationship and what they recommended as best practices. The risk managers and brokers NU spoke with all agree on the need for open and honest communication, from the time the request for proposal (RFP) is issued throughout the relationship to its termination. They also agree that trust on both sides at all levels is key to making the relationship work.

Here are 10 strategies that risk managers and brokers say makes their relationship stronger.

1. Invest time in the relationship

A strong relationship takes time and effort on everyone’s part. The risk manager has to invest the time to educate the broker about the company’s business and its place in its industry so the broker can be successful in the market, says Gary Pearce, vice president of the Risk Management Group at workforce solutions company Kelly Services Inc. The broker has to be willing to invest the time to learn about the client’s organization as well.

“The risk manager/broker relationship, like a good marriage, needs time and attention to prosper,” says C. Nahua Maunakea, director of global risk management for IHS Inc., a global source of critical information and insight, headquartered in Englewood, Colo. He switched brokers in July 2014 as the result of an RFP that his company requires every three to five years, and he says there was an adjustment period. But his risk management team and the broker’s team meet weekly to review open items, giving both teams an opportunity to work through issues and raise questions. “It’s all about good communication and managing expectations,” he adds.

Laurie J. Champion, chief operating officer and account executive practice leader for Aon Risk Solutions, Atlanta, recommends that you hire the best broker for your industry and then spend the time to educate the broker about the specifics of your business. She advises risk managers to “introduce the broker’s team to your executive leaders, take them to see the operations, and let them work a shift.”

A broker that understands both the client and its industry does a better job of representing the client in the marketplace. The broker can use that knowledge to present a more complete picture of the client to the underwriters, explaining any past losses and risk factors.

2. Become a trusted adviser

The brokers and risk managers NU spoke with agree that the most successful and long-term relationships are those in which the broker acts as a business consultant as well as buying appropriate insurance coverage. “When you gain the trusted adviser role, the relationship is most successful,” says Jeffery W. Colburn, managing director at Marsh Risk Consulting. This trust allows the broker to respectfully challenge some of the client’s assumptions or business practices and provide solutions that may better fit the client’s needs.

“Insist on and participate in effective strategic and operational planning for renewals and risk management projects,” advises Champion. She recommends that both the broker and the risk manager include actions, tasks, and deliverables in that plan so that it’s comprehensive and everyone can see how the pieces fit together. When there is a good plan in place, both the risk manager and broker teams can manage expectations and hold each other accountable.

3. Anticipate client needs

When brokers anticipate their clients’ needs or suggest new ways of doing things, they can substantially improve risk mitigation and loss control across the client’s organization. Sarah Perry, ARM-P, risk manager for the city of Columbia, Mo., says, “Don’t just wait for me to ask you questions. Bring new products and coverages to me, and alert me to issues.”

Perry also wants brokers to be open to new ideas from her, ideas she may get from conversations with colleagues. A broker that is a strategic partner and trusted adviser should help the client review the pros and cons of such new ideas, leading the client to a well-thought-out business decision regarding new coverages or other changes.

4. Make specific recommendations

Matt Edelheit, senior vice president, department manager, risk management, for Lockton Companies, finds that the best relationships are those in which brokers and risk managers trust each other implicitly, are accountable to each other, and are both working toward a common goal. He believes that having a “line of sight” into the client’s business is the best way to help his clients achieve solutions to their objectives. Without that perspective, it’s difficult to provide any specific recommendations.

The broker also serves the client’s interest by pointing out changes the client could make that would allow the broker to be more efficient for example. Maunakea notes that his new broker reviewed statement-of-value worksheets that he had been using for several years, asked questions about why certain information was included, and showed him what data could be left out without compromising the integrity of the information and its value to underwriters. “I appreciated the broker’s suggestions on how to improve our process,” he says.

5. Address issues promptly

Risk managers have to communicate clearly when something isn’t working and give the broker an opportunity to fix what’s going wrong. Brokers also have a responsibility to let the clients know if there are problems from their perspective that need to be addressed. Pearce and his team regularly have discussions with their broker around what’s working and what’s not, and ask for feedback on what the risk management team can do better.

Everyone makes mistakes, Maunakea points out, but what is important to him is whether the broker acknowledges the error and the way mistakes are corrected. Early on, his new broker’s support team made a mistake with his account which caused the broker’s team to be penalized as specified in the performance guarantee. The account manager took full responsibility and used the opportunity to improve the process.