Risk managers face tough choices when a favorite producer with whom they have important business relationships and sometimes social relationships, too, leaves the brokerage firm they use.
“Relationships are an essential piece to effective risk management,” Gloria Brosius, president of the Risk & Insurance Management Society Inc., said in a statement.
“Risk financing programs are dependent on the strong and candid relationships risk professionals build with their brokers, as well as the services and products offered by providers,” said Ms. Brosius, who is also director of risk management and insurance for Pinnacle Agriculture Distributions Inc. in Loveland, Colorado.
“When a broker changes firms, we must thoroughly assess the situation and make the decision that best supports our organization’s goals,” she said.
Options include moving their account to the producer’s new employer, staying with the brokerage and working with other producers, or moving to a third broker.
“The policyholder is the one that ultimately has the right to make any decision he wants,” said Frederick J. Fisher, president of El Segundo, California-based Fisher Consulting Group Inc.
“You have to go back to the basic value proposition of why you’re using that broker” in the first place and what value they bring, said Peter Viscardi, former director, risk management and environmental affairs, for conglomerate American Brands Inc., which has since been dissolved.
“If the value is unique,” whether in terms of the broker’s institutional knowledge of your company, superior technical knowledge or superior market ability, “you might want to consider retaining them,” even in their new firm, said Mr. Viscardi, who is now a Springfield, Tennessee-based senior adviser with Hanover Stone Partners LLC.
However, risk managers should look at their broker service agreements “to make sure you don’t unwittingly violate the term of those agreements,” said Mr. Viscardi.
Insureds do not want to be in a position where they are deposed, said Stanley L. Lipshultz, a North Bethesda, Marylandbased consultant. They just go to a third agency and say, “You guys can duke it out. I just don’t want to be involved.”
