It’s not something insurance brokers have had to worry too much about in recent times. In fact, not since the early 2000s, and we may not see that sort of severity this time around. But how will brokers cope if we do see a considerable or even moderate shift in the market?

Straight from the horse’s mouth!

There is certainly a core of leaders in broking who have their concerns. They will admit their front line people are not equipped to have the sorts of conversations with clients that will successfully navigate them through a market which is hardening to any significant degree.

Their people simply have not been trained or equipped for an eventuality that was a problem for ‘another generation’ of brokers.

What are the challenges?

The prevailing winds of a market whose pricing has continually blown south, producing cheaper and cheaper prices has led the broking market to create a certain type of buyer.

Brokers have:

  • Taught clients to shop
  • Educated clients to believe that creating ‘competitive tension’ annually is positive??
  • Taken credit for delivering cheaper prices when in many cases it was simply market driven
  • Created a buyer whose mentality expects prices to reduce annually
  • Failed to have robust discussion about the insurance market cycle, which, however long it takes, will turn and present unpleasant financial outcomes for clients
  • Not counselled clients about taking advantage of cheap pricing: buy more coverage, get their house in order, improve their risk.
  • Not acted as ‘the trusted advisor.’

Who and what is a ‘trusted advisor’

This term gets bandied around a fair bit, but who and what is a ‘trusted advisor’ and more importantly do you have them in your business?

Recently I came across a pretty good definition. It highlights why, in a market whose winds decide to ‘blow north,’ a ‘trusted advisor’ will survive.

It also highlights where the deficiency may lie for many insurance brokers and sales people in general.

Source: Trusted Advisor Associates LLC


Has to do with the words we speak. In a sentence we might say, “I can trust what she says about insurable risk: she is very credible on the subject.” This will not be an issue for most brokers.


Has to do with actions. We might say “if he says he has done a thorough marketing job, I trust him because he is dependable.” Again this is not an issue for the vast majority of brokers.


Has to do with the safety or security that we feel when entrusting someone with something. We might say “With her deeply developed understanding of our business, our objectives, aspirations and our risk tolerance, I have absolute faith that our insurance program is entirely appropriate to achieve our goals. It is this thoroughness and commitment during her tenure as our broker that has earned her my trust”

Research has shown that these types of engagements and the deep questioning required to achieve it, takes brokers out of their comfort zone and are often not had with clients. Brokers who achieve this can generally tell clients what they don’t want to hear and maintain their trust and confidence.

Self orientation

Refers to a person’s focus. In particular, whether the person’s focus is primarily on him or herself or on the other person. We might say “I can’t trust him on this – I don’t think he cares enough about me, he’s more focused about what he gets out of it.” Or, more commonly, “he’s more focused on what he has to say, he hasn’t really tried to understand my needs.” Herein lies a challenge for brokers and it’s a common outcome in ‘product flogging’ and this is a common trait in the industry and with sales in general.

The trust equation has one variable in the denominator and three in the numerator.

Increasing the value of factors in the numerator increases the value of trust. Increasing the value of the denominator – self orientation – decreases the value of trust

KEY TAKEOUT: ‘Trust is not earned by companies, it’s earned by individuals with individuals.’

Whilst companies are often described as credible or reliable, intimacy and self orientation is entirely about people! How your people communicate and the behaviours they exhibit will determine which side of the ledger they fall.

The current state of play

The true ‘trusted advisor’ will navigate a hardening cycle and come out the other side relatively unscathed. He or she will have had the discussions which position the client appropriately and deliver no surprises.

The question is how many of these people do you have and what do you do about the rest?

Many broking organisations recognise that they don’t have enough of these people. So they will need to develop them… QUICKLY!

A lack of soft skills training and an over emphasis on technical product training has developed a certain type of front line broker. One that is quick to jump to ‘solution mode,’ talk about product, their services and their company, but uncomfortable about having deeper engagements which focus on client outcomes, challenges and personal impacts that will enable them to create the right solution!

The immediate task at hand

It would be nice to think that many clients would be informed, well positioned and have a plan in place for the changing environment that has been carefully crafted in partnership with their broker, but this is unlikely.

Getting brokers out of their comfort zone and engaging in deeper discovery around client outcomes, challenges and personal impacts, won’t happen by osmosis. There will need to be a structured process to upskill the workforce, manage and coach it going forward.

But with the clock ticking and ‘northerly winds’ already starting to blow, these sorts of client engagements need to happen sooner rather than later.

This will allow you to formulate some sound plans to help achieve the client’s outcomes and remove their challenges, importantly build trust and hopefully stay in control of the process if things get ugly! However, remember that your solution is only as good as your discovery!

Lessons from the last hard market – for those who can remember!

If there were some key lessons from the last hard market. It was:

  1. If you have bad news, have a plan that will work toward a client’s overall objective as a business and remove as many challenges as possible, even if that involves some work on the client’s part.
  2. If comfortable with your insurer, ‘bring them into the tent’ early with the client. Let them know what outcomes you are working toward, and in a tripartite manner move forward, both the client and the market will respond well to this.
  3. Many brokers left bad news to the 11th hour believing the client would not have time to seek an alternative and they could blame the market. This is fatal and you will forever lose the client’s trust. Even if you hold onto the account that year, you will lose it the next, if not mid-term – it is not the behavior of a ‘trusted advisor.’
  4. Make sure clients know what you actually do for them in some detail. Don’t assume they know!…I recall losing a large and difficult account in an area I ran. This was on the basis that our fee ‘looked’ excessive, and that they felt we had over charged for services, (competing brokers fanned this flame). We hurriedly put together a stewardship report which clearly identified the vast body of work undertaken throughout the course of our tenure with the clients numerous and diverse businesses and submitted it to the board. We were subsequently reappointed, with a comment from the board “we had no idea you did that much work on our behalf, with our people and our facilities, which is clearly valuable.” Lesson learned!

The bottom line

Whether we see a sizable shift in the market or not, handling adverse change still takes skill, in most cases it needs to be trained, coached and mentored.

Now let’s face it, a harder market is not all bad news for brokers, and an uptick in rates will mean an uptick in commissions. However, with pressure from regulators around the issue of commissions and transparency, who knows what might happen? Brokers will be wise to develop their skills to be able to justify their worth going forward, it’s pretty much a no brainer!

If we were to see a sizable shift, fee based business would be seriously challenged. At the top end of town where broker margins are already very slim, this would be a considerable hurdle in the absence of a skilled front line workforce.

Suffice to say, the more skilled a broker’s workforce in this changing environment, the better the outcomes will be.

There is also another key point here; employers have an obligation to equip their people to do the job at hand and individual brokers have a right to expect that their employer will provide them the skills they need to do the job!

How will your business respond?