The Consultative Broker™ Briefing
Volume IV, Number 11
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2007

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"Cost and Capacity"

Over the past several months I have been talking with and visiting a number of the top brokers in North America.  We are all saying the same thing…“Its Nuts!”  We are currently in a hard market with no end in sight.  You all know the horror stories:

• The excess marketplace is out of control

• The comp market in some states has blown up

• Terrorism coverage with “fire following” is impossible to obtain

• Auto fleets have gone through the roof

• Middle market accounts have “stabilized” - at a 30% increase!

There is one universal theme - Capacity and Cost.  The astute carriers are saving their capacity for only those accounts that they perceive are the best opportunities.  The only question we face is…at what Cost?

Successful Consultative Brokers understand the importance of presenting risks to the marketplace in the most favorable light.  They know that during the hard market, the most difficult sale may be to underwriters.  Here are some general rules that the professional brokers follow when looking to attract capacity at an attractive cost:

Require Client Authorization – Each submission should be accompanied by a letter from the client directly to the market authorizing the broker to negotiate “solely” on their behalf.  This leaves no doubt as to the question of Broker Control.

Target Submissions to Select Carriers – A Consultative Broker has a good idea who the players are for each account.  Focus only on those carriers in the initial stages of discussions.  Flooding the marketplace serves no one’s best interests.

Use Mini-Submissions – Astute brokers present selected markets with an “Executive Summary” of the account.  These preliminary submissions are a compilation of the important data underwriters require.  It provides both the broker and carrier the ability to determine common ground without wading through pounds of paper.

Involve the Clients in Underwriter Meetings – This serves a dual purpose.  It breaks down barriers in an underwriter’s mind while showing the client how much effort you are going to on their behalf.  The ultimate result is a higher level of trust on all sides.

Here are the real keys to obtaining Capacity:  Do not flood the marketplace with submissions.  Be specific.  Know the underwriters’ appetites and have complete documentation.  And always know what you are trying to achieve.

It is apparent to most pundits that the hard market shows no signs of relenting during the second half of the year.  During this unsettled period, your success will be judged upon obtaining the Capacity of the marketplace at an affordable Cost.

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