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

 

---

Brokerage Darwinism Part One - The Richard Nixon Process

Picture this scenario…  You have just come from meeting your top prospect.  They have informed you that because they like you so much, you will be given first chance of selecting the 3 carriers you need to bid their insurance. You, of course, will be competing against several other agents. As a Consultative Broker, you know that this will not be in their best interests.  What do you tell this client in order to demonstrate this?

You could say . . . “Unfortunately, there are not that many carriers that will do the right job for you.  By fragmenting the marketplace, you are doing yourself a disservice.”

Or, you could say. . . “By placing multiple brokers and carriers in the marketplace, you are in fact driving your own prices up through diminishing reinsurance capacity.”

You might even say . . . “When you put brokers into the marketplace on a bid basis, you are allowing the carrier to select the broker.”

All of these are valid points, but miss the real picture.  Here is the real BIG answer as to why a prospect should not use the marketplace selection process… It is antiquated!  It does not take into account what I call “Brokerage Darwinism”.

But first, a little history lesson.  The Marketplace Selection process was first used in the mid to late 70’s.  I know because I was actually there!  At the time there were 35,000 Independent Insurance agencies across the country.  Frankly, they all looked the same to buyers.  There was no difference between them, except in one area.  The carriers they represented. 

The quality of an agency was determined by some of the carrier plaques that hung on the walls.  We differentiated ourselves by pointing to the quality insurance carriers we represented.  Companies like The Continental, The Home, The Aetna (big and little), The Kemper, The USF&G, The Royal, and of course The Reliance.  (I’ve still got the trinkets from all of them.)

So, over time, the top agencies used their unique ability to access carriers as the main point of their value proposition.  After all, from that point forward, most competing agencies looked the same. We all paid claims and serviced policies.

In an effort to control a process that in many cases might involve up to 30 competing carriers, the Marketplace Selection process was born.  It allowed a buyer to bring some sense into a process that had become out of control.  By assigning markets, the buyer could at least keep the quagmire of a playing field level by knowing who was going where.  In most cases you needed a scorecard.

Now, flash forward some 30 years.  The majority of the major national carriers that existed when the process was developed are no longer around, or have merged.  The marketplace doesn’t offer 25 or more legitimate alternatives.  What’s more, the major carriers that do still exist; have contracts with virtually all the top agencies.  The carrier contracts are no longer a point of differentiation.

So here is the bottom line.  When you, as a broker, allow a buyer to back you into the Marketplace Selection process (bid and quote) they are forcing you back in time.  They are making you operate like it is 1974.  Can you say Richard Nixon?  Has your business evolved since then?  Has their business operations changed?  Chances are that if you forced them to operate their business with 1974 methods, tools, and techniques they would be out of business.  What does that say about those of us that are willing to operate our business like it is still 1974?

In Part 2, we will give you the ammunition needed to dissolve a buyer’s confidence in the Richard Nixon Process.  If you keep reading . . . we will keep writing.  Let us know what you think.

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

Consultative Broker Briefing Main Menu

---

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