Saying “no” can be difficult but should brokers accept every client that comes their way?
This and other key challenges that many brokerages face, such as competing against the likes of international giants Aon and Marsh, were discussed at a recent webinar hosted by BizCover for Brokers.
PNO Insurance Director Peter Conquest, one of the panellists, says in some circumstances turning down a client may be the right approach but it’s not a path recommended by other brokers who sat on the panel.
“In my view, in a brokerage like ours and I think in most brokerages in Australia, it is barely profitable to serve some of those micro-SME clients and I think as brokers you’ve got to be disciplined to say ‘no’.”
He says he makes the point in reference to servicing clients with efficiency and for less experienced brokers, it can be a “real trap… just to say yes to every single referral that they get”.
However, Austbrokers ABS MD Rebecca Wilson says if a brokerage has in place the structure to support its operations, it should be able to service every client without making a loss.
She says at Austbrokers ABS, the business has set up the teams it needs to serve clients in the correct way and correct form.
“And we make sure that in our SME space where we have micro SMEs, we have a process where no matter what we will make money from it,” Ms Wilson said.
“There is not a single client that we would ever turn away ever unless the behaviour was wrong.”
McLardy McShane co-founder Mike McShane says for a mature brokerage it may make commercial sense to turn some business away but it’s not a strategy that will suit every broker as it’s dependent on other factors.
“If you’re just starting off, any business is good business right? You’ve got nothing else to do, you might as well write anything you can,” Mr McShane said.
He also believes for brokerages just starting out, accepting every client opportunity can pay off in the long-term.
“The more client numbers you have, hopefully if you do a good job, you’ve got them telling other people how good you are and then it becomes an advertising medium for you,” Mr McShane said.
Panellists at the webinar also discussed other factors that shape a successful brokerage.
BizCover for Brokers’ Founder and CEO Michael Gottlieb says brokers should set their bar high to stand out from the field and the likes of Aon.
“If you are only doing the same job that Aon does, then the customer may as well go to Aon,” Mr Gottlieb said.
He says he used to ask his team “what have you done that Aon wouldn’t have done?”
“And I think that is a key thing, right? Whether it’s around negotiating better pricing, whether it’s around negotiating better coverage, whether it’s around understanding their business better, what have you done that the biggest broker wouldn’t have done?
“So if you want to be better than the average, then you need to do something that they hadn’t done.”
Mr McShane agrees, saying if brokers are not adding value, then they shouldn’t be taking on the business.
“If you’re going to do it, you’ve got to do it properly and do it respectfully and add value,” Mr McShane said.
“If we’re doing SME business and home and contents and private motor business, if we’re not doing it better than the direct market, if we’re not adding value, we shouldn’t be doing it.”