It feels like every day another direct insurer launches into the marketplace with promises of industry-changing innovation.
That direct insurer’s marketing never includes its often negative effect on employee numbers, however.
Andy Barile, an insurance consultant, remembers a time when human risk mappers were employed as part of the handwritten underwriting of policies before machines and standardization took over. Yet despite the onset of machines, Barile is optimistic about the future for independent insurance brokers because there are real financial reasons for clients to stay – albeit they must be wary.
“The smaller, independent brokers, their largest accounts, the ones that spend the most money for premiums, they have to be careful,” he said. “Because there’s so many people trying to convince that insured that they should have their own captive insurance company as a way of risk management and saving money on their insurance program.”
Barile “aggressively markets” himself as an objective consultant for brokerages, captive agents and insurers on the feasibility of insurance options.
“A San Francisco agent approached me and said ‘our biggest client was a trucking company and they’re being talked to by three or four of the major brokers because their account is now on their radar.’ When it was small, their account was not on the radar screen of the big brokers. Now they’re coming in and saying they should have their own captive insurance company,” Barile said.
“I go in, I do the feasibility study, I make the presentation to the owner of the agency and the owner of the insured. I come to the conclusion that, in this particular case, they should stay with Lexington insurance company, which is their carrier. Because over the years, historically, Lexington has paid out more in claims than they received in premiums.”
The feasibility study resulted in the agent renewing the policy, Barile said.
Brokerages are also hiring consultants for acquisition advice because, like Barile, consultants shop themselves as experts while not having the license to sell insurance.
“I go in sometimes as a director of the insurance brokerage firm and sit on the boards for maybe six months,” Barile said.
“By being completely independent I can do anything and it works to the advantage of the client because they say ‘He’s not here to sell anything. He’s here to advise me on whether I should sell my agency to Marsh & McLennan or not, or whether I should form an agent-owned captive.’”
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