See the light

Insurers may be guilty of telling brokers that their place in the world would be more assured if they differentiated their offering but how many brokers are using a risk management led approach to do so?

While many brokers would say they feel they have a good grasp of the risks facing their clients there are still many that do not offer risk management or health and safety advice. This is ridiculous, when there is not just differentiation to consider but also the potential of increasing customer acquisition and retention and of earning commission.

Previously, the broker was viewed by some as primarily an insurance arranger and their business clients had no choice but to look for risk management guidance elsewhere. Now, it goes beyond insurance and involves finding other ways of supporting and adding value for the client. It is a commercial reality - especially in the context of the soft market - that risks can shift around easily on the basis of a cheaper premium.

The coming of Financial Services Authority regulation has been an additional driver in terms of brokers looking at their own competence and consequently adopting a different mindset for the needs of the client. As the FSA handbook says: "A firm should have in place appropriate arrangements, having regard to the nature, scale and complexity of its business, to ensure that it can continue to function and meets its regulatory obligations in the event of an unforeseen interruption. These arrangements should be regularly updated and tested to ensure their effectiveness." In other words, once brokers have seen the importance of having business continuity plans for themselves, they see the value of being able to advise the client.

Constantly adding value

It was, perhaps, a minority view in the broker community that the FSA was an opportunity waiting in the wings. However, those brokers that do see it as good business are doing all they can to wrap themselves around their clients. It is a more professional environment and brokers want clients to consider them as offering other business and risk solutions.

The broker needs to be constantly adding value to improve relations with clients. Getting risk management right also means obtaining a better balance of risks. The benefit of that is having more time to trade rather than spending considerable time dealing with claims.

Many insurers are keen to support brokers in achieving these benefits. Norwich Union and its specialist risk management division, Norwich Union Risk Services, help their broker partners enhance their offering by providing business support including a risk management package that can be used to develop brokers' own staff or assist their clients.

For brokers themselves, receiving health and safety training can enhance their understanding of client risks, making it possible to suggest ways they can be addressed and generally enhance the service offered.

The right people

The health and safety training available in the market ranges from one-day courses which give an overview of health and safety issues to in-depth courses that lead to qualifications accredited by the National Examination Board in Occupational Health.

Those brokers taking their executives up to NEBOSH level can gain a powerful differentiator in the market. For clients and potential new business, it leaves no doubt that they are talking to people with the right expertise.

The rise seen by NURS in the uptake for independent health and safety courses is significant. Over the past year, there has been a 90% increase in the number of brokers who are attending its nationwide accredited general certificate courses - a clear indicator that brokers are wanting more.

Granted, brokers are busy people and taking two weeks out of the office to train and study is not easy. To help this situation, NURS has brought out a course that can be done by splitting the two weeks in half, allowing brokers to attend two one-week modules a month apart.

The results brokers have achieved to date are impressive. Since the beginning of 2005, 95% of brokers studying for the qualification with NURS have passed, compared to the pass rate of 87% across all delegates, including those from commerce and industry. This is, by no means, an easy qualification, with written papers and practical workplace inspections. In fact, the last national pass rate, published by NEBOSH for June 2006 was 71%.

The ultimate aim is to have a broker with a higher level of knowledge and understanding, who can have in-depth conversations with their client and then provide a better submission to the underwriter on positioning the risk.

This constitutes a true shift for brokers into the health and safety market, which is extremely valuable to clients. The last thing the client wants is to be getting improvement notices from the Health and Safety Executive or, worse still, a prohibition notice which may lead to a business or process being closed down.

Once brokers have seen the light when it comes to risk management training, they can start inviting their clients to participate in courses provided by others, but carrying the broker's branding.

Sometimes, after such courses, the client wants to take it further and follow-on investment by them could mean an extra commission for the broker, or passing on the discount as another way of cementing the relationship.

If some brokers remain resistant, it is more often owing to the pressures on time. For those that do it, they really see the value in building long-term and customer-centric relationships.

Some brokers dealing with personal lines or micro businesses might gain benefit from tapping into other risk services such as websites, e-newsletters, and online assessment tools.

Norwich Union's approach is clear - to have a sound portfolio of risks requires a risk management-led approach. Therefore, engaging the broker and the customer to the benefits of risk management is fundamental. Not only is it a differentiator, it can also enable the broker to do something of higher value, especially in liability, health and safety can make a big impact and could, ultimately, avoid a serious injury or a fatality.

More than a year ago, Ray Holland and Graeme Robertson, two directors from Hamilton Robertson Insurance Brokers, based in Kirkintilloch near Glasgow, undertook the NEBOSH General Certificate training course along with Ken Hendrie, from their client, Kelvin Bedroom Systems.

NURS ran the course in Glasgow. The syllabus covers the mechanics of health and safety at work, including: how to write a health and safety policy; how to conduct risk assessments; the importance of training staff to do their jobs with health and safety in mind; and accident investigation and workplace inspections.

In addition, the course considered some specific hazards, such as noise and vibration, working at height and handling dangerous machinery.

Ray Holland says: "We had always felt that the cost of commissioning the services of an outside health and safety consultant was a major investment for a small business. So, it would make sense if we could give advice to our clients and help them to draw up their own health and safety policy. At the same time, it would give us greater knowledge to understand why underwriters suggest particular conditions."

Taking the two-week duration of the course away from trading was a major time commitment for the two directors but it was felt to be a worthwhile investment. As Holland explains: "When we are competing with the larger brokers, having the extra expertise helps to demonstrate a higher level of professionalism."

After getting through the course, Holland felt they had made "giant steps" in their abilities: "It was like starting with a fresh outlook and going back to basics with an understanding of the 'Health and Safety at Work Act', the courts and the fines that can be levied against companies.

"It has also installed a greater health and safety consciousness that will enable us to nurture our own people as well as clients and to point them in the right direction."

However, it has been in the client-facing role that Hamilton Robertson has truly felt the difference. Holland explains: "We feel more confident going into a new environment - in a manufacturing business, for example - with a better understanding of the problems affecting that company on a daily basis.

"Now, when giving clients advice, we feel more authoritative and are able to leave the client in no doubt about the legislation and punitive action they are up against with health and safety. And, as we expand our own business, we will see the benefit of putting our new brokers through such a course."

Make the difference

Robertson, reflecting on the 12 months since taking the course, adds: "With numerous commercial clients, it has helped us to understand their health and safety needs and provide solutions by referring them to risk experts, such as NURS, which is a potential fee earning avenue for us. Critically, having the knowledge can make the difference between securing a piece of commercial business or not."

Issues surrounding health and safety arise every day, according to Robertson: "Businesses need to comply with the [i]Health and Safety at Work Act[i] and should be carrying out risk assessments. Now, we can talk confidently about their health and safety policies and the need for a competent person, which enables us to better present the risk to underwriters. If they are contravening any regulations, we can warn them about the risk of invalidating their insurance.

"Four out of five companies are positive about what we tell them and want to have more information or a visit from a risk adviser. For those who are not, at least we have given them the benefit of our advice."

- Brian Wallace is Head of risk ssservices, Norwich Union.