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Risk Managers' Forum Stewardship reports Boost retention and cut costs By Roger C. Wade, ACAS, MAAA, and Marilyn B. Wade, CRM, ARM The consolidation of some smaller insurance agencies and the purchase of middle market agencies by larger firms have led to increased competition for clients. Keeping existing clients is much more cost effective than getting new clients. With new clients, there are the marketing costs to obtain them, the time it takes to understand their business and needs, and the overhead costs associated with getting them into your system so you can service their accounts. How do you go about keeping your clients? One way is to provide them a service they might not get elsewhere: a stewardship report. A stewardship report tells your client what services you have performed over the past year and how they have benefited the client. A full stewardship report should be completed annually, and quarterly or semiannual mini-reports also can be provided if the account warrants. The annual report should be personally delivered and discussed. This is also an opportune time to discuss plans for the next year. Preliminary meeting to set goals Before deciding what should be included in a stewardship report, you should find out what services your client needs and wants. A preliminary meeting with the client to identify concerns for the coming year will help both of you determine what goals should be set. It is much easier to meet your client’s expectations when you know what those expectations are in advance. It also gives you a chance to temper any unrealistic expectations. Mark DeLillo, ARM, the North American risk manager for Taylor Woodrow, Inc., in Bradenton, Florida, says he likes to carry out strategic discussions about his insurance program’s structure and what important tasks need to be accomplished in the coming year. It is important that the goals set at the beginning of the year be established jointly between the client and the agent so that they remain realistic and achievable. Who works on the account? In addition to your client’s specific goals, a stewardship report should contain a list of the people who are working on the client’s account: the account executive or producer, the service representatives, the claims handlers, and anyone else with whom the client might come into contact. This list should also contain “Whom to call if...” scenarios with specific contact information such as direct phone numbers and e-mail addresses, as well as an emergency contact person to call when the agency is closed. Policy information Policy information is the heart of an insurance program and is a key feature of a stewardship report. The report should contain a list of policy numbers grouped by type of policy (with an explanation of why there might be more than one policy for that type of insurance), premiums, deductible or retention amounts, expiration dates, and a description of each policy that includes a synopsis of the policy’s coverages, important endorsements, and exclusions. Some jurisdictions require insurance agents and brokers to disclose to their clients the commissions and fees earned on their accounts. Some agencies voluntarily provide this information. In the interests of transparency, the stewardship report should include information about commissions and fees charged, broken down in some meaningful manner, for example, by line of coverage. Claims information Automation has greatly streamlined the process of gathering and analyzing claims data. Although your clients may have access to “real-time” claims information from the insurance carrier, they might not know how to turn all that data into information they can use. Your agency can perform a valuable service by providing information on accident repeaters, which of the client’s departments are having the most accidents, how much the accidents are costing by department, the frequency and severity of accidents by type (for example, strain, sprain, broken bone, etc.), frequency and severity of accidents by cause (for example, slip and fall, lifting, automobile accident, etc.), and any other information that would be meaningful to your client. At the preliminary meeting, you and your client can discuss what information is needed and how you can provide it. Jim Green, CRM, ARM, former risk manager for Justin Industries in Fort Worth, Texas, says he always wanted specific information in the stewardship report on three claims categories: (1) claims that had been open too long without any activity on them; (2) claims where the reserve was changed significantly, whether up or down; and (3) large claims where there was a change in adjusters. His reasoning was that all three of these circumstances warranted some special review to determine the cause. Loss control activity Small to mid-sized companies often do not have the expertise to conduct their own loss control audits and inspections. If your agency is large enough to provide this service, you should keep detailed reports of this activity and include it in the stewardship report at the end of the year. A listing of any preventable claims that occurred during the past year and the potential loss control measures would be helpful. If your agency does not provide loss control services to its clients, you can coordinate with the insurer and include its findings in your stewardship report. Market analysis of coverages Reed Wykes, CRM, AIC, director of risk management for Parker Drilling Company in Houston, Texas, says he is asked each year to estimate the costs associated with his company’s insurance program for the coming year. He has several sources for this information, including brokers, underwriters, and other risk managers who have a working knowledge of how the market is doing and where it could go. He doesn’t expect any one source to be omniscient, and every experienced risk manager gives a disclaimer because a forecasted number is better than no number, but the predictions are usually close to the mark. Wykes says that having this market analysis provided in the stewardship report saves a lot of time in preparing budget forecasts. Conclusion A stewardship report is a service that most larger agencies and brokerages prepare for their clients. In addition to providing valuable information to the client, this yearly report also gives the agency a concise written record of the information and services it provided the client. A stewardship report helps the agency retain existing clients, which is much more cost effective than adding new clients. * The authors |
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