Despite the declining relative importance of the broker channel in Belgium, the (non-life) distribution is still dominated by brokers and agents. The average broker calls upon his top 3 insurers for more than 80% of his commission. This means that it is of crucial importance for insurers to get into the brokers’ ‘winners circle’. Are you investing in your broker relationship management in a smart way?
BRM is short for broker relationship management. Building or maintaining a good relation with intermediaries is something most insurers are more than willing to invest in.
Despite the declining relative importance of the broker channel in 2012, in 2013 the relative importance of the broker channel actually increased. In Belgium, the (non-life) distribution is still dominated by brokers and agents. Moreover, in absolute numbers, both channels are still growing (for non-life).
(Importance of distribution channels (life & non-life) – source Assuralia)
Over the coming years we can expect a significant consolidation in the landscape of intermediaries for obvious reasons:
What does this mean in terms of investing in BRM, does this become less or more important considering this expected consolidation? Let’s have a look at some facts…
As is often the case, Pareto’s law is very much applicable to the production figures of brokers. The average broker calls upon his top 3 insurers for more than 80% of his commission.
This means that it is of crucial importance for insurers to get into the brokers’ ‘winners circle’.
(Average share of top 3 insurers for brokers (life & non-life) – source Benhurst Broker survey 2014)
But is it even possible to enter this circle, or are the borders closed? The answer is clear and sound: “Yes it is possible”.
Studies show that independent brokers are not extremely loyal to their top insurers. Most brokers do not maintain the order of their top 3 insurers in terms of production or even call upon insurers outside their top 3 (based on portfolio) for an important part of new production.
(Production for insurer over last 6 months vs. total incasso of top 3 insurers for brokers source Benhurst Broker survey 2014)
So far we have established that:
The logical next question is:
“How do I enter this winners circle? Is BRM the key to the winners circle?”
Rather than guessing or theorising over this question, again I prefer to look at the facts: what are the most important factors that brokers indicate when choosing to work with a specific insurance company?
Brokers indicate that the most important criterion is the product range of the insurer. For more complex insurance products (e.g. life insurance products) the role of the account manager takes second place! For more straightforward insurance products (non-life), the relative importance of the AM in choosing the insurance company decreases, but still takes fourth place.
Considering the expected consolidation of the broker market and the impact of account managers on the “winners circle” of the surviving brokers, it is even more important for insurers to invest in the right kind of BRM/account management.
Over the past few years working with account managers and commercial departments in many insurance companies, I noticed that the approach towards account management is quite different from insurer to insurer. The only constant (surprisingly?) seems to be that the gut feeling of AMs plays an important role in BRM.
An unstructured approach towards account management or BRM often leads to what I like to call: “The Inspector’s path of the least resistance”. In this approach, account managers spend most of their time with intermediaries they like (and vice versa), paying little or no attention to the potential that these intermediaries harbour.
Most insurers and account managers can benefit hugely from a structured account management approach. Insurance companies that are not only willing to invest in account management but are willing to invest in “smart” account management are reaping the benefits, maximizing their return on investment.
At a large Dutch/German insurer we recently implemented our “excellent account management approach”, changing account management from an art (the artist / AM only decides the outcome) into a science (bringing structure to the chaos). Account managers realized an increase in production between 15% & 31% for their focus intermediaries!
Would you like to learn more about “smart” account management? Look for my next blog on this topic where I will share the basic principles of “Excellent account management”.
Intermediaries are still the most important distribution channel in the Belgian insurance market. The average broker calls upon his top 3 insurers for more than 80% of his commission. You need to get into the brokers’ ‘winners circle’.
Are you ‘just’ investing in your broker relationship management or are you investing in a smart way? Makes sure you get enough bang for each buck you spend.