The Consultative Broker® Briefing
Volume III, Number 3
A Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2001

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“Total Cost of Risk (TCOR) – The Key to Demonstrating Client Value”

Total Cost of Risk (TCOR) is the yardstick that all successful Consultative Brokers use to establish client value. This is especially true in this time of changing prices. A broker that has based their value on the price of insurance is in the deep weeds!

TCOR includes the entire impact your firm has had on a client's balance sheet. This impact can be demonstrated over a period of time. In short, an astute broker can use it to prove a long-term commitment to the consultative relationship.

When demonstrating TCOR, you must focus on these major areas: 

1. The cost of the risk financing 

2. The impact of loss control in reducing costs.

3. The reduction of overhead by utilizing resources.

One of the most critical parts of using TCOR is the establishment of benchmarks. These benchmarks are the cost per $1,000 of revenues. They are extremely important because they will demonstrate your impact over a period of time. Most agent/brokers allow themselves to get caught in the, “what have you done for me lately” category by being compared to last year's price. That is a very dangerous place to be in the current marketplace.

As a Consultative Broker you must go back several years and develop these benchmarks. Simply divide the premiums by client revenues on a per thousand basis; you will obtain the benchmark cost of the premiums. Then make adjustments to that number based upon items 2 and 3. These are the variables that a Consultative Brokerage uses to differentiate themselves. Items 2 and 3 are your unique contribution to a clients' balance sheet.

For more information on TCOR, you should visit our website and review the article we recently published in Rough Notes Magazine on the subject of Total Cost of Risk. Feel free to distribute this article throughout your organization with our compliments. 

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

 

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Consultative Brokerage® Techniques are utilized by agents and brokers across North America in the development and retention of upper middle market revenues.  The Consultative Broker Briefing is delivered electronically free of charge to selected agents, brokers, and other insurance professionals across North America.  To subscribe to The Consultative Broker Briefing, please click here.

Copyright 2007 C.R. Ekern & Company