'Tis the Season: To Increase Revenue!

The season is now upon us. Once again, this time of the year brings producers and their respective firms to the most important time of the year. What time is it? Well, of course, it is Stewardship Report Season once again! Take a look at your January 1 renewals. Are there any important revenue accounts that renew around that time? Of course there are. Many of you have the majority of your large account income stream that renews at that time. In fact, much of your Fall is taken up by doing all the work that this important date represents.

The season is now upon us.  Once again, this time of the year brings producers and their respective firms to the most important time of the year.  What time is it?  Well, of course, it is Stewardship Report Season once again!

Take a look at your January 1 renewals.  Are there any important revenue accounts that renew around that time?  Of course there are.  Many of you have the majority of your large account income stream that renews at that time.  In fact, much of your Fall is taken up by doing all the work that this important date represents.

Now, imagine what your life would be like if all your key accounts were “put to bed” in early December with renewal negotiations complete.  The only thing you really had to do on these accounts was to wish them all a Happy Holidays.

Here is the point.  What you accomplish now, in Stewardship Season, will have a direct bearing on your income in 2014.  You really need to do Stewardship Reports in July and August on these key income clients.  If you don’t, you are running the risk of someone else doing it for you in November and December when you are under competition!

Now I know that we have been telling you this for years.  Thankfully, many of you are now acknowledging Stewardship Report Season as an important part of your business calendar.  Remember, Stewardship presentations should be prepared and delivered 6 months in advance of renewal, not during the renewal process.  (It might be too late then!)

There are dozens of versions of Stewardship Reports.  Many of them are nothing more than a review of policies, claims and underwriting data.  Some of them are a list of services.  But, here is what very few do:  demonstrate how your firm actually reduced a client’s costs and improves their business organization in a quantifiable manner.

That is the key point of a Stewardship Report.  In fact, we call ours a ValueReport™.  The main difference is a ValueReport™ actually shows a buyer how your organization has helped them create a meaningful difference on their financial statement.  It demonstrates (in financial terms) how your representation and resources have provided an outcome.

Here is one more thing to consider:  Doing a ValueReport™ will impact your income/productivity by 7% next year.  That is the difference between the attrition in your book along with the cost to you and your family of being under competition on key renewals.   More on this later, but for now, just accept it.

So, if you are going to do a Stewardship Report, make it the best.  Right now the standard of excellence is represented in a ValueReport™.   Here is what they entail:

  • A meaningful cost comparison over time.  The creation of benchmarks and comparison periods that show the buyer your actual Value Proposition.

  • The value of your projects, not the features.  Demonstrating the actual value of your projects and services by quantifying them and translating them to the buyer’s financial outcomes.

  • The impact that your organization has achieved on your client’s Key Performance Indicators (KPI’s).  This is how you actually embed your outcome into a client’s business organization and demonstrate your value.

In closing, please remember this:  What you accomplish now in the heat of the summer ValueReport™ Season, will have a big impact on how “chilly” your yearend renewal season is!

By the way, if you would like to learn more about our ValueReports™, you should visit us at:

 [The Major Account Development System™]

All the best to Consultative Brokers™,

Rob Ekern

Fees: Get Paid What You Are Worth

For years we have been saying this: There should be no correlation between your income and the commission paid by insurance carriers. The two just ain't the same thing. Now I know this sounds like sedition, but stay with me here.

As your clients have become more sophisticated, many of your firms have added internal resource capabilities.  Whether they be claims, risk control, client portals or financial analysis.  The commission structures that are developed and paid by insurance carriers just don't support the expense of these resource capabilities; and your producer compensation too.

So, the answer comes in 4 possibilities:
  1.  As producers you determine to give up part of your commission in order to support the resources required to stay in the game on larger accounts.  (A bad option)
  2.  Your firm requires you to pay for resources out of your pocket, thereby forcing you to select which clients get resources and who does not. (A worse option)
  3.  You decide as a firm to get out of the larger account arena and simply work on commodity transactions. (The worst option)
  4.  You learn and commit to developing ROI-Based Fees.  (YES!!!!)
There has long been a fallacy built into our business that no longer has legs.  This problem is around the calculation of a Fee and how we present it to clients. Now this edition of the Consultative Broker briefing will not be around the methods of fee calculations.  There are as many calculations as there are stars in the sky.

For today, we all need to accept one universal truth about fees.  At the end of the day, after calculating fees, most brokers then compare it to commissions.  If the fee is too low; they adjust up.  If too high; they adjust down.  So, eventually the fee becomes a function of commission benchmarks.

The key here is that they ultimately peg their income to what the market will bear.  Then, pray to god that another broker doesn't undercut them in a competitive situation!
But what about their quantifiable impact to the client?  Doesn't that count for something?  What about the ROI the client has received from their ability to deploy resources and achieve a consultants goal of improving the client's business model?  What about the impact your client has received in reduced costs, improved efficiencies, competitiveness and productivity?  What about that?  Shouldn't that be factored in the Fee as an ROI?  What about that?  Huh? Huh? Huh?

Now before you scoff at me.  Let me tell you a true story that recently occurred with one of our broker clients.  Over the past several years the broker and firm did a tremendous job of reducing this client's losses and premiums.  So good in fact, that the premium reduced from $550,000 to $300,000.  The fee on the renewal was $50,000 and the client was asking for a reduction.

Here was the problem our intrepid Consultative Broker faced.  He could either lower his fee and therefore not get fully compensated for the firm's efforts.  Or, he could present the client with a complete ValueReport based upon the calculations of our Major Account Development System.  He chose to present the ValueReport prepared by MADs.

So, what happened?  The client fully accepted the $50,000 fee based upon the evidence and proof of the ROI the broker had provided the client.  It approached seven figures over the course of the past 3 years.  Not only that, but the client acknowledged it would be fruitless to entertain any other broker proposals.

So, it is time for you and your firm to get with it.  ROI-based selling is the only way that you can stay in the game and compete for profits.  Remember commissions paid by carriers and under-priced fees should have no correlation to your income.  Hey, we have a vested interest in this.  Our goal is to help firms like yours to prosper and grow, no matter what.

If you keep reading, we will keep writing.

- Rob Ekern

Stewardship Reports: If You Build It, They Will Come

To demonstrate to your clients how your firm has impacted their business, you must give them a quantifiable yardstick by which to measure your Value Proposition. This is critically important if you intend not to be judged only on your role as a “service organization.” Once you allow that to happen, you will no longer be in a unique space. After all, how do you prove a higher level of service when compared to others?

It has been close to 10 years and over 100 briefings ago, since we first spoke about Stewardship Reports.  Since that time I am glad to say that the awareness of Stewardship Reports and their importance has risen tremendously inside our business.  Stewardship Reports are a major part of the ongoing dialogue between clients and their brokerage representatives.

Yep, I am glad to say that the awareness and importance of Stewardship has risen.  Unfortunately, the quality of the reports has not!  In fact, over the past decade, most Stewardship Reports have become meaningless fluff, designed to shower clients with paper and superfluous information.

I am sorry to say that most Stewardship Reports have denigrated to claims reviews, policy analysis and timelines of activities.  While these are important activities, they should not be the key ingredients of a Stewardship Report.  If that was the case, we would call them “Activity Reports.” As most of you know, activities and results are two different kettles of fish.

So, let’s get back to the purpose of a Stewardship Report.  To demonstrate to your clients how your firm has impacted their business,  you must give them a quantifiable yardstick by which to measure your Value Proposition.  This is critically important if you intend not to be judged only on your role as a “service organization.”  Once you allow that to happen, you will no longer be in a unique space.  After all, how do you prove a higher level of service when compared to others?  Sadly it usually comes down to price.

After a decade of speaking and writing about it, we have finally taken matters into our own hands and created a unique tool that allows regional brokerage firms to demonstrate their actual Value Proposition.  We call it our Major Account Development System™.  It creates a 10-16 page client document that shows CFO’s and decision makers the actual results created inside their business. This is done through demonstrating your impact on profits, competitiveness, productivity and human capital.  In this process, insurance costs are the smallest ingredients.

The brokerage firms that are now using the Major Account Development System™ are achieving outstanding results.  Some have even had CFO’s invite them back to make boardroom presentations concerning how they have helped improve the firm’s business operations.  Now that is a beautiful place to be!

At the risk of this seeming to be a commercial, I wanted to tell you about MADs in this briefing.  We have been speaking about Stewardship Reports for a long time.  Now we have invented the ability to do one that is meaningful.  Here is what it includes:

  • A review of a client’s Total Cost of Risk, including benchmark comparisons by TCOR category and line of coverage.
  • The quantifiable impact on a client’s business risk by category.  This includes hazard, financial, operational, strategic and human capital.
  • A 10 page ValueReport™ that outlines the value and direction of your projects, along with their impact on Total Cost of Risk.
  • The creation of a PowerPoint presentation in real time.  This allows you to place the key results into a client overhead presentation for group presentations.
  • Middle market Total Cost of Risk Factors

Again, at the risk of sounding like a commercial, we needed to tell you about this.  Now that it has been developed by C. R. Ekern & Company, the game has changed.  No longer will Stewardship Reports and Value Propositions be simply conceptual in nature.  We have created the ability for regional brokerage firms to truly create and discuss their quantifiable value proposition with middle market clients.  There will be no longer the excuse for substituting price, features, timelines or claims analysis in exchange of a quantifiable impact for clients.

It has taken us over a decade to accomplish this.  The Major Account Development System™ is the creation of thousands of hours of discussion with brokers across North America.  It contains over 10,000 data points involving client data, brokerage projects and quantifiable impacts.  It is complex, but extremely easy to work with.

So, I wanted you to know about this.  Our clients are using it right now and eventually, the MAD System will become a staple in virtually all brokerages that intend to compete and retain larger middle market accounts.  As was said in that great movie Field of Dreams: “If you build it they will come.”  The MAD System™ is built; and brokerages along with their clients are coming!

- Rob Ekern

For more information on how to quantify TCOR, manage projects, build a value proposition, and consistently deliver stewardship reports and new business presentations to your customers, check out the Major Account Development System (MADS), an on-line consultative broker's toolkit. Available now!

Ready to learn more about Consultative Brokerage Sales Training? Visit the Consultative Brokerage Academy.

To learn more about C.R. Ekern & Company, please visit our website

Dodge the Torpedoes!

As many of you know, I was considered a successful working broker back in the bad old days of the last soft market. In fact, I was also fortunate enough to earn the top production award from my mega-broker employer. So, aside from now being a consultant, it does qualify me to give you some insights from close to 37 years of production experience and 4 cycles.

As many of you know, I was considered a successful working broker back in the bad old days of the last soft market.  In fact, I was also fortunate enough to earn the top production award from my mega-broker employer.  So, aside from now being a consultant, it does qualify me to give you some insights from close to 37 years of production experience and 4 cycles.

First of all, nothing changes.  I heard the first complaints about the marketplace in 1975.  The words are the same.  “Dog gone those insurance companies!  They don’t know what they are doing.  They are putting us out of business by constantly lowering their premiums.”

Or this one:  “My clients just keep beating me up over premiums.  Each year they tell me that I need to sharpen my pencil.”

Here is the one I really like:  “My insurance company gives me two prices.  The one they give me on renewals, and the one they give my competitor on new business.”

Here is another beauty:  “I talked to my underwriter today and they gave me the premium for your renewal.  But, they told me that they did not want to lose your business and I can probably get you another 7%.”

What do all of these have in common?  They are statements from agents and brokers who constantly live in fear.  They are afraid of their competitors, carriers, and in many cases their own clients.  Why is this?  Because in most cases they do not have any semblance of broker control.  They consider themselves simply messengers who feel lucky when a client blesses them with a renewal or an underwriter coughs up a price.

So, it is time to stop the bleeding and stand on your feet.  Dodge the Torpedoes!  Of course the water is filled with danger, but it will not stop you if

  1. Make certain your client knows what your value is.  That entails that you speak with them regularly about all the “little things” that you and your firm do for them.
  2. You must do Value Reports™ (Stewardship Reports).This shows your client the quantifiable impact that you make inside of their business.  It goes well beyond the pricing of insurance.
  3. Don’t live in fear. Clients can smell this. I have seen many occasions when a broker created their own competition by “running scared.”
  4. Keep prospecting tougher deals. Here is what most seasoned brokers know; there is less competition at the top than the bottom.  The bigger the deal, the less number of brokers.
  5. Prospect your commodity competitors.  Now that the marketplace is beyond free fall, some of your competitors will have no place to stand.  They cannot make up the difference by simply price

As a working broker in the depths of the last soft market, here is what I know.  Successful brokers grow their business no matter the marketplace conditions.  Once every decade or so, they get an artificial boost from the “hard market”.  But they do not wait for it!  They find prospects that have problems and these problems have nothing to do with the insurance marketplace.

So, Dodge the Torpedoes!  Get with it and understand that the marketplace conditions are the same for everyone.  Stop looking for the easy price deals, they don’t exist.  Everyone is in a feeding frenzy and the successful brokers will then be the ones who practice the ability to differentiate themselves by deployment of resources and the reduction of a client’s cost.

- Rob Ekern

For more information on how to quantify TCOR, manage projects, build a value proposition, and consistently deliver stewardship reports and new business presentations to your customers, check out the Major Account Development System (MADS), an on-line consultative broker's toolkit. Available now!

Ready to learn more about Consultative Brokerage Sales Training? Visit the Consultative Brokerage Academy.

To learn more about C.R. Ekern & Company, please visit our website

Projects - The Mother's Milk of TCOR

Project is a word that consultancies use. They denote an action that will lead to a quantifiable outcome that benefits the client. They are not the typical insurance sales activities. By always having at least one project in progress, these astute brokers are able to demonstrate their ongoing “Value Proposition.”

Consultative Brokers™ know the huge importance of client “Projects.”  These are the actions taken and performed by their organization on behalf of clients.  The critical nature of these projects is very simple.  Without being able to demonstrate their projects, eventually they know that they will be fired by the client!

Project is a word that consultancies use.  They denote an action that will lead to a quantifiable outcome that benefits the client.  They are not the typical insurance sales activities.  By always having at least one project in progress, these astute brokers are able to demonstrate their ongoing “Value Proposition.”

Here are some examples of Projects that virtually all successful brokers regularly provide to clients:

  • Claims Review Projects – A regularly scheduled review of claims with analysis and suggestions of how to change the claim outcomes.
  • Experience Modification Reviews – An analysis of the workers comp emod using one of the fine programs that allow brokers to trend losses.
  • Risk Control Programs and Analysis – The study and implementation of risk control programs that will reduce loss costs.
  • Behavioral Modification Programs – Providing the training to employees that will improve their behaviors and reduce claims (Drivers Training, Ergonomics, etc.)


Of course there are many more examples.  Here is the key point, however.  If you don’t have any projects going you are not able to demonstrate how you impacted a client’s Total Cost of Risk.  Projects are the Mother’s Milk of TCOR!

I know that many of you are attempting to sharpen your Total Cost of Risk skills.  Without projects you can take no credit for helping a client reduce costs.  In these cases the client’s Total Cost of Risk is entirely dependent on luck or insurance carrier pricing.  This is a one dimensional view of TCOR.  As you know, insurance is the smallest TCOR expense.

It has been stunning to me over the years how some brokers avoid the discussion of projects with clients.   In some cases they either fail to offer them or assume the client didn’t care.  The worst transgression is to offer the project, have the client refuse and then drop the subject.  All of these hapless brokers will hear a common response from their client at a future date . . . “We think we have outgrown you.”

So, if you really intend to create value for your clients and wish to use a Total Cost of Risk Value Proposition, here is what you need to do right now on all your top accounts:

  • Speak with your risk control and claims personnel.  Ask them this simple question; “What one thing should we be doing right now to help this client?”
  • Prepare your client for the importance of the project you are offering.  Show them how this project will help them reduce TCOR in the coming years.
  • Sharpen your skills on leading a team.  If you are to be a successful Consultative Broker you must be perceived as a “gatekeeper.”
  • Feature your projects inside your Stewardship Report.  This is the point of differentiation between your firm and the other brokers.
  • Don’t take “no” for an answer. In the event a client rejects your suggested project, you must either press your point or find another project.  If you don’t have one, you will not be able to demonstrate your value and eventually fall victim to invisibility.


The delivery of Client Projects is the most important skill in the establishment of the TCOR Value Proposition.  These projects allow you to demonstrate how a client’s losses, indirect loss costs, and administrative costs have been reduced based upon your partnership.  So, you must ask yourself this question: “Do I have a project currently going with all my key accounts?”  The answer will determine whether you can sip the sweet “Mother’s Milk” of a TCOR Value Proposition, or suffer the bitter consequences of a value proposition based only on price and luck.

By the way, we built an extensive project management module into our Major Account Development System, giving users the ability to easily capture, quantify and create reusable templates for their project & resources. With the help from top industry risk management professionals, we've even provided key benchmarks to take away all of the guesswork on value quantification. Take a look.

- Rob Ekern  

For more information on how to quantify TCOR, manage projects, build a value proposition, and consistently deliver stewardship reports and new business presentations to your customers, check out the Major Account Development System (MADS), an on-line consultative broker's toolkit. Available now!

Ready to learn more about Consultative Brokerage Sales Training? Visit the Consultative Brokerage Academy.

To learn more about C.R. Ekern & Company, please visit our website

Outrunning Marketplace Change

Until last week, the soft market seemed to be a demon with no end in sight. We have been speaking to you about the importance of using Total Cost of Risk as a measure of your value, other than simply a cheaper price. Those of you who embraced our teachings are reporting a tremendous growth of new revenue. But...what about the flip side?

Until last week, the soft market seemed to be a demon with no end in sight.  We have been speaking to you about the importance of using Total Cost of Risk as a measure of your value, other than simply a cheaper price.  Those of you who embraced our teachings are reporting a tremendous growth of new revenue.  In fact, just this week, we heard from 2 of our clients that had just been appointed as brokers based upon their value proposition and our Total Cost of Risk Value Report™ (Stewardship Report) (each with about $25k of income).

But...what about the flip side?  What if the recent Japanese earthquake, tsunami, and nuclear accident take the capacity out of the marketplace?  Right now it is predicted to reach about $35 billion of insured loss.  My guess is that it will go much, much higher (this figure does not include the tsunami or the nuclear event).  At the beginning of the year, one industry expert stated that for the market to turn there needed to be a $50 billion disaster.  In the first 2 months we have exceeded that between Japan, the Middle East, and New Zealand.

Of course this is a tragedy of epic proportions and we share the global concern over the tremendous loss of human life in Japan. As you know, we are brokers, not insurance company actuaries, so I will save my predictions for private discussion.  However, the impact of these global events cannot be overlooked. What if the marketplace should suddenly harden?

Consultative Brokers™ who understand and practice Total Cost of Risk will be able to demonstrate all the ways they have helped their clients reduce costs, even when the price of insurance goes up.  The uninitiated brokers will be sitting ducks as buyers consider alternatives to simply paying the freight for global disasters.

So, if you think the soft marketplace is here forever, then you need to use Total Cost of Risk as a way to create new revenue based upon your value proposition.  Also, if you think the soft market will never end, then you need to show your clients all the ways you have been reducing their costs.

Now, let’s presume the worst (after all, we are in the insurance business).  Let’s just say that the Japanese disaster is the tipping point or close to it.  Here is what you should be doing right now:

  1. You must get very proficient with TCOR.  As each cycle nears the end, buyers become more sophisticated.  There is a whole new generation of buyers who were not in charge during the end of the last cycle in 2001.  They are smarter now, and less-patient based upon the difficult economic times.
  2. Log and value your projects.  At some point you will be required to demonstrate how your projects and resources helped clients reduce their costs.  You must be very clear on the value of the project, the impact on costs and how it improved the client’s business operation.  A list of features and timelines don’t feed that bulldog.
  3. Begin playing defense.  Your clients and buyers are not in vacuums.  In the event the marketplace changes radically, you need to be the bearer of the bad news…IN ADVANCE.  This entails keeping them informed using articles and web site information.  They can hear it from you, or others, take your pick.
  4. Begin playing offense.  Those of you who are Consultative Brokers and really understand TCOR should aggressively call on prospects that have simply been buying insurance from the “price sellers.”  These price sellers would be at a big disadvantage because they have been a one trick pony.
  5. Never use your income as a negotiation.  Some brokers decrease their incomes in the hard marketplace in order to soften the blow to the buyer.  These amateurs do it because they can’t prove what their value is.  So, they use their income to negotiate credits from underwriters in order to reduce premiums.  If they understood TCOR or could create a Value Report they would be able to stand their ground.

OK, now I admit to presuming some things as regards to the marketplace.  I can’t say that this is the tipping point.  Only the actuaries, reinsurance, and insurance carriers can determine that.  But, one thing is for sure: the excess capacity of this marketplace is being sucked out in one quick hurry.

So, as Consultative Brokers, your job is to anticipate marketplace conditions rather than react to commodity pricing fluctuations.  It is only through the adoption of Total Cost of Risk and the delivery of Value Reports that you can outrun marketplace change.  

- Rob Ekern

For more information on how to quantify TCOR, manage projects, build a value proposition, and consistently deliver stewardship reports and new business presentations to your customers, check out the Major Account Development System (MADS), an on-line consultative broker's toolkit. Available now!

Ready to learn more about Consultative Brokerage Sales Training? Visit the Consultative Brokerage Academy.

To learn more about C.R. Ekern & Company, please visit our website

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