Business P&C Insurance Renewal / Bid Process

[scott]

I posted here over the past few weeks looking for comments on the renewal and bid process. I'm not sure that the current process works very well for the insurance buyer. I'm considering building some different formats.

I have put together an analysis of the 4 different options we have available now:

-Renew as is
-Current agent markets
-Multiple agents market
-Agent selection process

I am quite interested in suggestions and comments on my lists of advantages and disadvantages.

Go to http://docs.google.com/View?id=ddhvsfvb_181g69cs8f2 if you are interested in what I have put together so far.

This is almost an academic exercise at this point. I am trying to look at the options as to what an insurance buyer can do and what the advantages and disadvantages are to both the insured and the agent. I purposely left the insurance company off as I thought the advantages were obvious.

Comments welcome. What did I leave out? What did I miss? Thanks.

[Big Dog]

Here's a "client side" viewpoint.

I work for a large healthcare provider. We currently have two brokers - one handles the HPL/GL (i.e. hospital professional liability) and the other handles all else (property, Workers' Comp, D&O, Crime, etc.). The broker that handles all else usually takes a tact of "renew as is", usually because that's the easiest for them.

Admittedly, we do have to push them to check their other available markets to make sure that we are getting the best deal - not just from a price standpoint, but also from a coverage and service standpoint. As a hospital, we do utilize as much outside help as we can. This broker does have access to a large selection of markets.

The only time that we'll consider going to a different agent is if either of the brokers we utilize just totally messes things up. Utilizing multiple agents to quote is a waste of everyone's time. The better option is to start the process early and select the BEST agent - that is, an agency/brokerage that has a good selection of markets, has knowledge of the client's particular industry, and is willing to do a proper job in marketing to their available markets.

I'm finding that most agents/brokers have become lazy and take the path of least resistance, and will do as little work as possible.

[Mainemiss]

Ouch Big Dog! That's from the agency side... If an experienced agent with access to multiple markets who like your particular industry does not shop every year do not be so ready to accuse them of laziness. In the first place shopping is very labor intensive for both the agency and the company and is not necessarily needed if your broker has a handle on the markets, their pricing and coverages. He/she may very well know that the hours spent shopping would merely be an excercise for naught as they know the appetites and the rates available.

From the company side the agent loses credibility if the same apps show up year after year and there is no incentive for the underwriter to sharpen her pencil when it brings no results. There are also very definite advantages to longevity with a company at claim time particularly if there is any gray area involved.

I doubt that your agent is lazy...we are all aware of the multiple hits upon our better clients that occur every year and we are never too self satisfied to sit back with our feet on the desk. More likely the agent is waiting for some shift in pricing or programs at which point they will launch a serious effort to see if they can shake loose something special for you, their valued client.

[Big Dog]

Trust me...they're lazy. I've been here for three years, and every year it's "renew as is" on almost all lines and all layers of coverage. All of the people are ex-insurance folks who still keep tabs on the market, and are well aware of what's going on. Unless we force the issue of "we understand such and such market is now interested in healthcare risks", they won't make the effort.

Also, considering that we're the ones that complete all of the applications and provide them with all of the needed information, there's very little "labor intensive" work that they have to do.

[Mainemiss]

Hmmmm...we complete all applications and ask the client for the updated info...

Might I then ask why you would not change unless a major mistake is made?

[Big Dog]

We're actually considering making a switch, partially because they continue to under-impress us, and because of a couple of SNAFU's (failure to place flood insurance, accounting issues).

My main point is that it is the insurance agent's/brokers' job to make sure their client has both the best and proper coverage for their operations, but also at a financially attractive price. Having worked previously for both insurance agencies/brokerages, and on the company side, I am fully aware of how labor intensive putting together a renewal (and quoting on it) is. When I worked on the company side, I saw the same submissions from the same agents every year. Quite honestly, they'd put in as little effort as possible to actually write an account. Most of the effort was left up to the company. I lost track of how many times I would explain to a potential insured the advantages/disadvantages of a paid-loss, high deductible, or retrospective rated plan. I'd be the one doing the "selling" while the agent sat there and would say nothing (or often chime in on how another insurance carrier's program was better).

[Mainemiss]

OK Big dog...I must allow for your very real scope of experience...guess my circle of agencyowner friends would never conduct themselves or allow their producers to project such a poor image...peace!

[Rainmaker]

First let me commend you on your desire to establish a 'critical path' or methodology around this process that will serve:
1) communication of your value proposition
2) a process around which you can agree mutually with your clients on how their accounts will be managed
3) generate operational efficiencies within your firm as to how accounts will be handled
4) a platform around which you can scale, ie onboard both CM's and producers

Way to go. Let me say that again, way to go!

Consider the following:

1) your marketspace (you agency size and your customer size)
2) what are the norms for this maretspace?
3) what can you add to the process to generate additional value?
4) how can you use the above to differentiate yourself in terms of value proposition to win more new business within this space?
5) how can you generate efficiencies (profit) from it per premium dollar won?

Cheers

[michga11]

pay attention to the client and you will know which way to go. i have some clients that are very happy where they're at, as respects to the carrier. rule of thumb is that if it's placed with a wholesaler or a surplus lines carrier, you should always market. if they are with an admitted carrier, with great claim's service, pricing, and offers that 'automatic renewal', which i you all do realize that 'automatic renewal' is more of a peace of mind for the client, as they know they are insured, then why market? ask your clients. it's about the client. i had one client almost have a damn heart attack when i offered an alternative carrier. also, i am only talking on the commercial side, personal lines isn't my thing. of course, i am up to my ears in backlog because i do actually try to think of the client first, as that is my job. it gets hard when you got a moron boss telling them lies and doing stupid stuff though. like screaming at clients and blaming them and stuff. stoopid stoopid stoopid. then you have to pick up the pieces. that's why i am backlogged. thanks completely mental dumb owner, you make me crazy. and this is insurance. sparta!! ta-da! *rolls eyes and hisses