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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.

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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.

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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.

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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.

6. Consider "customer service" from the client’s point of view

The phrase “good customer service” was repeated by all the brokers and risk managers that NU spoke with as necessary to a strong relationship. But customer service is more than just shopping the client’s account in the marketplace and finding coverage that meets the client’s needs at the lowest price. It also involves how well the broker handles claims when there is a loss and how well the broker’s internal processes function separately and together.

Seidenberg has found that some brokers are good at the strategic side of the relationship but their claims handling process is inadequate because the different broker segments operate in silos. That makes it difficult to do business with the broker and increases the client’s frustration.

Victor Parker, director of risk management for the City of Los Angeles, relies on his broker for advice on a wide variety of risk issues. But he has found that sometimes “brokers get complacent and think more about revenue than making customer service their top priority.”

Good customer service includes staying involved in the entire risk management program, beyond recommending insurance coverage, according to Perry. Her broker also participates in claims review meetings, making suggestions on how to improve the process.

“The client always comes first,” says Demetri Lembesis, CPCU, executive vice president, Willis Group, and Parker’s broker. In his view open and candid communication is key to maintaining good customer service. “It’s important to explain what you’re doing to help manage risk and, more importantly, why you are doing it,” he adds.

7. Make time for face time

In 2015, the world is so interconnected that where the broker is located in relation to the client shouldn’t matter—but it does, at least to Perry. She wants her broker geographically within a couple of hours’ drive time at the most so the broker can come to her or she can visit the broker’s office in person when it’s necessary or valuable. “Face-to-face meetings are still important,” she says. It helps both sides develop a stronger working relationship.

Seidenberg agrees that proximity and in-person meetings go a long way to cementing the broker/risk manager relationship. Such meetings help her connect with the broker’s team on a personal level and make it easier for the broker to represent her in the marketplace. Seidenberg also meets with brokers and markets in person once a year, which is easier to do if they’re geographically closer.

8. Maintain transactional competence

After the deal is concluded, Pearce finds that transactional competence is significant in maintaining the relationship. For example, does the broker’s administrative services team issue policies accurately, provide certificates of insurance as needed and process claims cost effectively and efficiently? How well does the broker manage the day-to-day operations? Some brokers can place more emphasis on their internal policies and processes than on what best meets the customer’s needs.

Perry agrees that ongoing customer service, especially in claims management and loss control, is important. She has a service plan in place with her broker, and they review it regularly, making modifications as necessary. “With a service plan I know what to expect and so does my broker,” she says.

Lockton’s Edelheit says that when employees are assigned to an account, they’re involved in all aspects of managing the account, from advising the client on what coverage to buy to claims processing and loss control. This approach eliminates silos and ensures that the person responsible for underwriting the account is aware of all the client’s concerns and potential issues with the account. It also allows problems to surface and be resolved quickly.

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9. Plan for change

It’s essential for managing risk and overall business planning to have continuity in the service team from the broker. “When you invest time in the relationship, you want it to last longer than a first date,” says Pearce. Discontinuity has caused him to switch brokers in the past. He understands the need for career development of the broker’s team, and values a fresh perspective, but “the broker should plan for the transition and be sure to maintain service levels” he says.

Colburn agrees that the traditional consultant model can be disruptive to the client if not handled correctly. He believes that the introduction of new talent to the client can be a positive thing, as long as the broker matches the new consultant’s industry expertise and working style with the client’s situation.

“We plan a six-month overlap when a member of a client team is transitioning,” says Champion. The person who is leaving trains the newcomer and doesn’t officially leave the team until the new person is ready to take over.

10. Bottom line: Be honest

The risk managers and brokers all agreed that honesty was critical to the relationship. The risk managers also agreed that pretending to have knowledge the brokers didn’t have or trying to bluff would cause the risk managers to rethink the relationship.

“I respect my broker more when he tells me ‘I don’t know, but I’ll find out’,” Perry says. She also appreciates the broker telling her that something isn’t a good idea but that he’ll help her find the right solution for her situation.

Seidenberg has found in the past that some brokers weren’t completely honest with her because they don’t want to deliver bad news. She would rather have the bad news up front so she can manage expectations internally, she says.

In keeping with the J.D. Power and RIMS study’s findings, the risk managers NU spoke with were pleased with their brokers’ performance and would recommend them to other organizations. For example, Seidenberg says that she “absolutely” would recommend her broker. Maunakea, Pearce and Perry also said they would recommend their brokers based on their strategic business advice and good customer service.

Parker puts it best: “I would highly recommend my broker to other municipalities. He works hard and earns my business every day. He also has the courage to give me the best professional advice and not tell me what he thinks I want to hear.”