2020 Best Practices Study

coverages, such as D&O or cyber. As the brokerage landscape evolves and the number of brokers with a billion or more in annual revenue increases, local agencies will continue to feel the squeeze.

• Use of data, technology, and artificial intelligence will accelerate. As COVID-19 intensifies economic pressures in our economy, agents and brokers will more aggressively seek to deploy technology as a way to improve client offerings, while also enhancing efficiency and driving down costs. • The need for visionary leadership will intensify. The insurance brokerage industry has historically been a steady, slow-growth business without significant change year-to-year. Thus, the leadership demands for many agencies have been modest and not demanding a great deal of time or vision. This is clearly changing. In the COVID-19 era, agency leaders are facing a plethora of urgent decisions across all fronts. Issues such as remote-work, technology disruption, clients’ evolving needs, and diversity in the workplace are all clamoring for a greater share of agency leaders’ attention. While some love the challenge, others are wond ering if this is what they signed up for! Trying to predict a five or ten-year future is harder than ever given the extraordinarily rapid pace of change. We are confident, however, that certain elements of the insurance brokerage business won’t change over the coming decade. When planning for the future, it is important to consider these unchanging factors as well. • Relationships will drive business. Insurance brokerage will still require finding the right balance between relationships and resources. When the Best Practices Study was launched in 1993, the top agencies were those that developed strong personal relationships with clients, while delivering the resources necessary to help clients succeed. Twenty-seven years later, these same elements are true, but have evolved. Agencies had to work extremely hard to maintain their competitiveness during an arms-race of client resources. The balance between relationships and resources has clearly shifted in favor of resources. One needs to look no further than employee benefits business to see how fundamentally the broker’s role has transformed. Yet relationships still matter, and they will continue to do so. Although the back-slapping producer has been replaced by a knowledgeable, resourced “consultant , ” clients still want a real human they trust and relate to. That is unlikely to change. In the post mortems of their failed business plans, several insurtech leaders have lamented that they didn’t properly grasp how important a human relationship is to the insurance client.

• Clients, employees, carriers, and communities will remain the four key pillars of any great insurance broker. Effectively balancing the interests and needs of these four constituencies is the best way for agents and brokers to plan for a prosperous future. When facing a major decision, the best agencies ask, “How will this decision affect our ability to serve our clients, employees, carriers and communities?” In a complex and rapidly changing landscape, this question can serve as a beacon in guiding a firm toward effective outcomes.

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