DAVE’S TOP 10

It was annual broker review time. Like all my company’s marketing representatives, I had to hold up an objective magnifying glass once a year to each of my brokers. I had to assess each one, listing their strengths and their weaknesses. This annual review included charts showing the mix of business my company was receiving from each broker, plus loss experience and profitability. And in the accompanying analysis, I had to write out an honest view on each broker’s suitability to the company, their overall professionalism, and their future prospects.

I was sitting at my desk at home, surrounded by these broker profiles which had been printed out by our broker management staff. Outside, I could faintly hear the gentle sounds of a Canadian summer evening: a lawnmower whining busily, and the shouts of kids and parents at the baseball diamond in my nearby park.

As my company’s senior marketing representative, I was luckier than most of my contemporaries. I had some of our most capable and profitable brokers, most of them operating in urban settings, and many of them seasoned, experienced professionals. But, in another sense, this is what made my job tougher. It was sometimes difficult to find obvious and telling differences between my brokers’ operations. What was the best way to rate them?

For a moment, my mind drifted off-track, and I began to recall the previous night’s late-night TV program, where the host had announced his “Top Ten” list to gales of laughter from the studio audience. I sat upright in my chair. “That’s it!” I said to myself. “I’ll draw up my own ‘Top Ten’ list of those attributes the best brokers display. Then I’ll use this yardstick to measure my own brokers.”

I pulled a fresh writing tablet towards me, leaned back in my chair for a couple of seconds, then put pen to paper. At the top of the page I wrote: “1. Hire wisely. Train effectively.”

My best brokers had a core of experienced and dependable people. There was a clear-cut chain of command. Their offices always seem to display an air of smooth and purposeful efficiency. Two of my best brokers believed in hiring young staff fresh from college or university, and not only putting them through the mandatory training required for licensing, but exposing them to further training to make them even more effective staff members. This approach, they believed, avoided the need to “un-train” staff out of bad habits learned while working for someone else. “I send each of my young CSRs on at least one course a year,” I recalled one of my lead brokers telling me. “It not only adds to their expertise, it gives them a chance to hear about new developments in our industry, and to network with other broker staff people. Sometimes, I feel they come back to me realizing that they have a pretty good deal in my office.”

Now: what should the next item be? I chewed the end of my pen for a few seconds. Then I wrote down: “2. Establish a few solid company relationships. Support them consistently. Add a reasonable range of specialty markets.”

I knew I could look over the names of my best brokers and see that each of them had a core of solid, dependable insurers. They supported them with good volumes of business, avoided “playing favorites” and stuck with these established companies through the years – suffering through the occasional periods of unrest, structural changes and management upheaval. My suburban broker friend Harry had said it best: “Dave – my lead companies and I need each other to survive. We depend on each other. We’re inter-dependent. So, if I support them through the good and the bad times, odds are they’ll do the same for me.”

I knew that Harry had patiently listened to the tempting offers that had come to him from new insurers trying to build volume by buying market share. He had politely said, “He’d think about it”, then had quietly continued to support his long-term markets plus the other markets he needed for specialized lines.

My next notation came quickly. “3. Have a good business plan. Review it regularly, and include a succession plan.” One of the best broker business plans I had ever seen had been created by Al, whose operation in a small town 160 kilometers away, was a model of computer-driven efficiency. Al had been smart enough to realize that his old system of running his brokerage by instinct and reaction simply was not good enough in an increasingly sophisticated insurance market. He had hired a professional business consultant who studied and analyzed his operation for a couple of weeks before he drafted out the framework of a sound business plan. The final one-year business plan was drafted with input from everyone in Al’s office. It included firm numbers on premium targets and profit expectations, budget levels for new equipment, even the levels they wanted to achieve in systems improvements. And, I recalled, like most good business plans, it included a formal succession plan for the business.

One of the best succession plans I had seen was created by broker Harry. I recalled him telling me that there are no standard “one size fits all” succession plans. Each one has to be custom-designed to suit individual needs. When Harry and his financial consultant drafted theirs, they had begun by compiling a list of the vital elements: Harry’s personal goals, the long-term objectives of the business, its current and expected financial picture, what sources of financing should be open to his successors, the key terms that ought to be part of the shareholders’ agreement, plus some alternative plans for succession in case Harry’s circumstances – or his firm’s – were to suddenly change.

Number four? I thought hard, then I wrote down: “4. Know your target market and how best to reach it.”

Another one of my successful brokers, a woman, had found a viable commercial market niche partly by accident, but once she discovered how few brokers knew how to meet this market’s special needs, she had successfully developed a five-stage plan to exploit this advantage: a market analysis (which defined the target market and determined if it was growing, static or in decline), a competitive analysis (which identified her competitors, their strengths and weaknesses), insurance product development, marketing strategies, and finally, financial projections.

I quickly wrote out the next item in my Top Ten. “5. Understand automation. Invest in it and use it effectively.” One of my most successful brokers had screened his staff and had found one person in his office who not only had outstanding computer skills, but was keen to develop them further. This person became his computer expert and while he, as the owner, kept pace with developments as best he could, he depended on this in-office expert to oversee his brokerage’s computerization.

I knew this broker took advantage of as many company and commercial training seminars as possible, particularly when they involved computer and software applications which were likely to have a direct impact on his operation. I thought back to a meeting I had with broker Al, who had agonized over kicking the paper-dependency habit in his move to transactional filing. Al had built in a phase-in period for the switch from entering daily client activities into the paper client files to logging these activities directly in to their computer screens…but had quickly found this “doubling up” was quite unnecessary. His office’s transition from intensive paper-handling to one-time computer-entry was smooth and uneventful.

Now for number six in my ranking. I didn’t need to think for long before I wrote out: “6. Take good care of your customers and they’ll take good care of you.” In my mind I could hear my good friend, broker Stan, saying: “The most valuable asset my business has built is the unsolicited praise of my customers.” Stan, I knew, was a firm believer in the concept that providing outstanding service was one way in which a broker could distinguish himself, or herself, from other brokers representing the same companies. Moreover, Stan’s view was that that the entire insurance industry is really in the t rust business. “Dave,” he had said to me many times. “Here’s the way it is. My customers trust that I will cover them against life’s dangers. The company trusts that the information I send along about my customers is complete and accurate. And, as the broker, I trust that the company will promptly and fairly pay any losses that my customers might sustain. From start to finish it’s a trust business.”

I knew that when a claim was reported to the company, Stan called back his client with the name and phone number of the adjuster assigned. Stan followed up a claim’s progress, and he delivered larger settlement cheques in person. From my viewpoint as a marketing representative, I got positive feelings about the way some brokers treated customers. They had their CSRs take courses in good telephone manners. They added 1-800 telephone numbers so their customers could call at no charge. They sent out a personalized letter to each of their customers at year-end, thanking them for their business. Some even offered free videotaping service for recording insured’s home or apartment possessions.

Number seven on my “Top Ten” came next, and I wrote down: “7. Do an annual client review and develop a checklist for commercial accounts.” I knew very well that one of my most productive brokers was a living advocate of such reviews, particularly with his commercial lines’ accounts. This broker had developed an effective checklist on commercial renewals and on new business, to ensure that all relevant covers were discussed with the client and either agreed to, or rejected. This procedure made certain nothing was missed, and also ensured consistency within his office among all the licensed staff. It simply eliminated the sort of oversights that could lead to E & O claims. And while he was content to leave the smaller accounts in the hands of a senior CSR for review, I knew that he personally looked over the files of the larger C/L accounts. He often found gaps in coverage, or he that increased valuations were in order. Not only that, but he found real value in arranging face-to-face meetings with his larger C/L clients. “Dave,” he had told me, “I think these one-on-one meetings show that I’m interested in looking after my clients, and the bonus is that it often gives me a chance to write the personal lines’ business of his staffers.”

Now it was on to number eight, and I carefully wrote out: “8. Pay well, but remember that money alone does not a contented employee make.” I smiled when I remembered how delighted my friend, broker Bob Davies, had been when he had launched a profit-sharing plan that included everyone in his office – management, CSRs, technical specialists and clerical staff. Bob’s office set a premium target and a 10% bonus payment kicked in if the figure was reached. Each percentage point above the target added a comparable percentage point to the staff bonus. Bob had considered – and ultimately rejected – a plan which would have paid a generous incentive bonus to his office manager and his senior CSR, on the grounds that it could create tension and ill-will when details of it inevitably leaked out. “Dave,” he had said to me. “I depend on everyone in my office to do a good and professional job. So why shouldn’t everyone share in our good fortune if we do well?”

Number nine came easily to my mind. “9. Keep abreast of industry trends and developments.” The brokers in my book who were exceptional performers almost always were up-to-the-minute on industry developments and took a keen, active interest in broker association affairs. One of my most energetic and productive brokers, Joanne, was a partner in a city-based all-female brokerage that kept setting new premium and profitability records, year after year.

Joanne had conceded to me that originally she had joined the provincial association as a “good way to network.” She had discovered that, in addition to that, association involvement kept she and her partner up-to-date on what was happening in the industry, on new computer software and hardware, on advanced systems, on staff training courses and on brokerage management information about everything from hiring policies to accounting and tax changes. “Not only that, Dave,” she had told me, “but from the contacts I made in the association we bought two other smaller firms and rolled them into our operation.”

Finally, I had reached the last item in my Top Ten assessment. I closed my eyes and mentally reviewed the preceding nine items. They each made sense, and collectively, I thought they comprised a pretty impressive yardstick against which I could quickly and accurately appraise my brokers. But what to write down for Number Ten? I doodled a couple of rough ideas on the scratchpad, scratched them out, sucked my pen for a second – then all at once, the flash of inspiration struck me. I wrote down: “10. Be nice to your marketing representatives. One day, they could be the company president.”