A few years ago at a Zywave conference, I got together with a few brokers to discuss how to do some of the things I talked about in my last blog to get the BOR. Most felt that there was a lot of business to be had in the 75 to 125 market, and we wanted to come up with a strategy to strike fear and greed into these folks to convince them we were the better broker. Based on this group size, we assumed the groups were fully-insured business and the majority received underwriting workups. (I know this differs by area, but for the most part it held true.)

What we came up with was very effective. I personally used it at the time to pick up a 65-life group in Milwaukee (which was not my wheelhouse) and others had tremendous success in their markets.
The process is still the same as I outlined in my previous blog. You still need to financially define what the current broker is making, which is fairly easy to do on a fully-insured group. You can use premium averages and standard commissions to figure that out.

To create fear that the current broker is not doing the job, ask the prospect, “Do you know what your carrier’s acceptable loss ratio was last year?” This typically will elicit a blank look from most, if not all, of your prospects — it did for me. Then they will ask, “What do you mean?”,  which allows you to explain how their renewal is calculated. This is a good opportunity to show your intimate knowledge on the financial aspects of the renewal. Typically CFOs and decision makers see a spreadsheet from their broker, but do not dive into the mechanics of a renewal. Even if a broker includes it in the proposal and goes over it at a high level, the prospect usually does not remember this.

The next question is, “Do you know what the carrier’s acceptable loss ratio is this year?” Of course, they usually don’t. Based on these two questions, you are now positioned. This is where you create the fear (that the current broker may not be doing the job) and greed (perhaps I can negotiate a better deal) in one fell swoop. 

At this point you state, “At Awesome Agency, we make sure all of our clients are educated on the renewal process and are aware of it. Here’s why. If you have a decent loss ratio this year, the carrier can just increase the acceptable loss ratio level and still hand you an increase. If a broker is not watching for that and comparing acceptable loss ratios over the years by carrier, you could end up paying more than you should. Happens all the time, but not on my watch.” Fear. It works.

Hire an intern to go back over your renewals and find out what the acceptable loss ratio has been by carrier. Also determine the average increase by carrier that you negotiated. If the prospect says they got an 11 percent from Humana, and the highest your firm has negotiated is 8 percent, you should feel like Brett Favre coming out of the tunnel on game day. This is great information as a weapon that most brokers do not use.

Worse-case scenario is the prospect is calling up their broker and challenging them on it. In my book, if you are not having fun making your competitors scramble, then get out of the game. And keep the success stories coming!