A High Performance Insurance Broking Model

25 May 2023 - Jack Marrows

I'm ready to launch into my blog series about the opportunities afforded by technology and a product mindest to Australian insurance brokers. But, before I can start, I needed a mental model of what brokers do. Ie. when I say brokerage why type of organisation am I speaking about? So I reached into my consulting toolkit and drew a Capability Map - I called it the High Performance Insurace Broking Model. A littly wanky but other consultants won't take me seriously without my inclusion of the words "High Performance".

See my capability map below - by my estimation most brokerages perform all of these functions to various degrees. The organisations that do a lot of them well excel. 

Don't confuse this with an organisational structure, it makes no comment 'who is' or 'should be' accountable for each of the jobs to be done rather, it should just be a comprehensive and organised collection of capabilities. 

To demonstrate my point:

• A one person authorised rep may perform all of the functions in Business Development, Broker Operations and Broker Support themselves. It is unlikely there would even realise they were perfoming some of these functions.

• A large brokerage may have multiple teams dedicated to Business Development and Broker Operations each with thier own domain of responsibility (eg. a Domestic Team and a Strata Team).

What have I missed? Are there jobs in here that would simply never be done by a brokerage? Do I need to change my vocab?

Functions of a high performing insurance brokerage:

Business Management - leadership and oversight

• Risk and Compliance Managment: implement systems and controls to assure compiance to policies (both internal and regulatory) and mitigate risk.

• Fiscal & Account Management: book keeping and accounting.

• Performance Management: typically the directors - set and measure the organisation against performance objectives; intervene in ordinary operations when objectives are at risk of being missed. 

• Enterprise Architecture: manage the of alignment and organisation of people, processes and technology to meet the businesses objectives.

Value Chain - know your market, define and develop products

• Supply Chain: for brokers this means priority access or even special rates with insurers and their products. Strategic partnerships may be reached that underpin a product and differentiate a brokerage from its competitors. Brokers may establish relationships with international underwritters to offer products not readily available in Australia.

• Product Management: definition and creation of what you sell to your customers. It doesn't just cover the service itself but extends to pricing and margins. 

  • If this concept is foriegn take a look at example product canvases for work a tangibly defined product may look like.

• Brand Management: initial definition of brand (colours, template, tone) and the ongoing management of the systems and supports that give the people working in Business Development and Operations the tools and skills needed to stay on-brand.

• Market Research: surveys, review market analysis, observation of competitors and more to understand movements in the market. It is necassary to fuel ideas and underpin the business cases for developing new brands, products and strategic partnerships with insurers. 

Business Development - find customers, understand their needs and make sales

• Lead Generation: identify organisations that would benefit from the product your brokerages sells. May involve advertising, buying leads, strategic partnerships, customer referrals or BNI groups, etc.

• Relationship Management: build strong relationships with leads and clients. Trusted relationships are needed for clients to be open about thier needs and share details of the challenges they are facing. Deeply understanding client needs is underpins Solution Design.

• Solution Design: understand client needs and compose a solution out of the products offered by your brokerage. 

Broking Operations - administer insurance policies and peripheral services

• Insurance Advice: provide customers with insurance advice that meets their needs.

• Quoting: solicit the information needed attain insurance quotes from insurers. Interact with insurers to attain quotes.

• Claims Processing: manage customer claims against policies.

• Policy Management: make endorsements against policies as client circumstances change. Manage the renewals process of policies.

• Reciepting: process customers payment for products sold.

• Debtors: follow up on late payment of products sold.

• Policy Financing: arrange loans to cover insurance premiums such that they can premiums can be paid incrementally on payment plans.

• Customer Contact Management: these are the transactions that make up customer experience. Involves customer interactions in call centers, email communications, IVRs, chat bots, text messages, etc. 

Business Support - develop the skills and tools needed for success

• People Management: everyone knows what they should be doing on a day-to-day basis.

• Organisational Development: training and leadership programs for employees.

• IT Management: IT support desk and support of technology used by the brokerage (big chunks of this support is typically outsourced).

• Human Resources: management of the people, thier contracts and entitlements with the brokerage.