Conference Coverage: Top Broker Summit
The 2011 Top Broker Summit educated senior-level commercial brokers on how to survive and thrive in a soft market
The ongoing soft market continues to challenge brokers who want to grow their business managing commercial risk. On October 5, 2011, Canadian Insurance Top Broker held its inaugural Top Broker Summit with a goal to assist brokers increase their bottom line during these challenging times.
The full-day event featured seven sessions including an insurer panel, a top broker panel, a panel on broker E&O, and a strategic risk manager panel.
Patrick Ryan, founder of Ryan Specialty Group and founder and past chairman of Aon, opened the day with a keynote speech that addressed his approach to business development and best practices for client retention.
“How do you grow a business in soft markets?” he asked. “You get creative. One way is to be looking for societal issues that people should address that haven’t been addressed,” said Ryan, noting this is how specialty insurers have developed, historically.
“As you’re looking at your business and ways to grow…, look around you and see what your clients needs are and what are unfulfilled or being fulfilled in an inadequate way,” he said. “I guarantee you you’ll find opportunity.”
He noted that the industry was a “people business” and that broker owners should focus on whom they employ because “it’s all about the quality of people you hire.” The key is to create a business that will attract strong players, and then motivate and coach them to become even stronger, according to Ryan.
“I think it’s important for people to understand that the retention of good people is directly related to the retention of clients,” he said.
When he was at AON, Ryan set a personal target to recruit 40 people each year and ensure they specialized in specific markets. He recalled a time when his team lost an opportunity with a construction client because they didn’t know enough about the business. He advised delegates not to approach a potential client until they research and educate themselves about the business.
Another tip Ryan shared with delegates: approach these clients and simply ask to review their policy. Oftentimes this can reveal gaps in coverage and you can win a client’s business this way, he said.
“Tell them beforehand that if we find you have serious gaps, or have needs for change, I’d like your commitment that we’d be able to do that for you,” he said.
One of the most unique and well-received sessions provided delegates the opportunity to chat with senior-level risk managers in an intimate setting—a risk manager was seated at each table and brokers were able to ask questions about their priorities and challenges. After 20 minutes, the risk managers switched tables so brokers had the chance to learn about another risk manager from another industry. Participating risk mangers came from a variety of sectors, including manufacturing, mining, real estate, finance, academia, government and entertainment.
The Insurer Panel featured Zurich Canada president and CEO Alister Campbell, Catlin Canada chief underwriting officer David Huebel, and Travelers Canada president and CEO George Petropoulos.
Huebel discussed current issues in the global economy, including the sovereign debt crisis, Solvency II, and the increasing cost of catastrophic events, including the Alberta Slave Lake wildfires, which was a $700 million loss—the second largest insured loss in Canadian history after the Quebec ice storm of 1998.
“We have to look at things like contingent business interruption coverage and if companies are covered for these types of events,” said Huebel.
He expressed how important it was for insurers to use predictive modeling.
“The industry has to say … we need more money to factor [these events] in,” he said. “We’ve seen increased competition in the market, with over 150 insurers in Canada at the moment. Prices are going down. 2011 is the first year in a decade that we see an underwriting loss in the Canadian industry. We think this will lead to increased prices in the future to offset these natural cats that are not being reflected in the current pricing.”
Petropolous noted the current Canadian economic situation was challenging for consumers, “our customers’ customers,” which in turn was challenging for the entire industry. Insurers and brokers can overcome this by employing better risk management procedures, handling claims diligently, and developing new products so consumers have more choice when shopping.
Also, customers are asking for more value, he said, and companies must address this by making sure they’re delivering on the products and services they offer.
Meanwhile, Campbell discussed the need for a broker’s role and value proposition to evolve because commercial clients are smarter, becoming more sophisticated and more engaged due to technology.
“[Client] dialogue is much more informed and decisions around how much risk can be retained and how to manage the risk is much more sophisticated,” he said. “The risk-managed space in Canada is a ‘think’ space. Middle-market customers are rapidly catching up and … I’m not so sure [the middle market brokers] are.”
This is resulting in consolidation and brokers attempting to “catch up on pipeline management” on the sales end, according to Campbell.
“But if they can’t catch up on the sophistication side, the value proposition side and the risk consulting side then the tier-two broker is very exposed.”
After lunch, delegates heard Justin Berry, vice president of Marsh, Berry & Company, talk about different business development strategies.
“Many [brokerages] still use a top-down approach with little emphasis on the historical growth of producers or consideration of how you will change the outcome,” said Berry. “High growth [brokerages] start from the ground up looking at their producers’ capabilities with a reality check of how they performed in the past.”
Berry suggested broker owners should use best practices such as setting producer book-of-business expectations with applied negative consequences, sales training with measurable improved outcomes, pipeline management for accountability and sophisticated service support models.
Rick Wellen, director, enterprise risk management at Rogers Communications moderated a Strategic Risk Manager Panel, which included Anne Chalmers, vice president, risk and security at Teck Resources Limited; John Kerr, director, corporate risk & insurance at BMO Bank of Montreal; Aaron Konarsky, director, risk management and internal controls, Canada Lands Company; and Joe Restoule, consultant, business development at AEGIS.
Years ago, a risk manager’s main role was to provide an update on the results of the annual insurance renewal process, according to Wellen. This report was low on the agenda, short in content and required very little discussion, he said. Now, however, organizations are more focused on risk management and demands on risk mangers continue to rise.
Wellen stated the goal of the session was to get the panel’s views on the evolving relationship between risk managers, partners and service providers.
According to Chalmers, her company, which has more than $10 million a year in premium, expects brokers to be an extension and trusted member of their risk management team.
“We expect excellent and open communication,” she said. “It’s a partnership. We want the broker to go to our risks, understand [them], be able to communicate with insurers, be part of a working group inside of our organization and come up with solutions.”
Likewise, Kerr added he expected his brokers to understand the regulatory environment of banking institutions, have access to specialty markets, provide broad coverage of domestic P&C carriers, be able to influence the underwriting community to facilitate contract negotiations, and provide service in a timely manner.
Making It To The Top
The day closed with a Top Broker Panel featuring Marsh Canada president and CEO Alan Garner; BFL Canada founder and CEO Barry Lorenzetti; and HKMB HUB International and HUB International Ontario president and CEO Neil Morrison. The three senior brokerage executives discussed the differing business models of their firms, issues around leadership and challenges confronting commercial brokers today.
One of the things that Garner learned about leadership is how to confront crisis. He recalled October 2004, when Marsh was at the risk of going out of business. While the situation mainly occurred in the US, its effects were felt in Canada as well.
“The silver lining to that whole event was we met every CEO or CFO of every one of our clients across the country,” said Garner.
He stated the key to overcoming the crisis was working together as a team. At the time, the executive group rallied together and focused on what needed to be done.
Morrison discussed HUB’s 230 acquisitions in 10 years. As a leader, he said his job is to ensure smooth transactions, while developing new business so the company is profitable.
Additionally, Morrison’s goal is to ensure the best and the brightest are hired and retained. One of HUB’s “critical success factors is ensuring people want to come and work at our company,” he said.
Lorenzetti spoke about the challenges of building a national organization, including competing against global companies and branding. He stated BFL overcame this by hiring top talent, which was a challenge in itself. The key to hiring top talent was to offer them something they weren’t getting at the larger firms, and that was the chance to become an owner, he said.
Lorenzetti added the loyalty of clients, employees and partners are also huge factors as BFL approaches 25 years of success.
Copyright 2011 Rogers Publishing Ltd. This article first appeared in the November 2011 edition of Canadian Insurance Top Broker magazine.