Part 1 in a series by Jack C. Randall, CIC, PCLA, PFMM
©2019 Randall Resources Int’l
It’s that hectic time of year again… Crunch time to get your company’s reinsurance placed for 2020!
Everyone in the mutual industry knows that outside of claims, Reinsurance is THE largest single expenditure on your financial statement!
If there were things your mutual could do to:
- attract proposals from multiple reinsurers
- get the best rates
- get the best terms
- be offered the broadest selection of programs and retentions!
…Would you be interested?
Having worked in various aspects of the insurance and reinsurance industry for decades, I have identified the key practices, mindsets, and approaches used by the most successful mutuals to secure their reinsurance. If you understand what these key practices, mindsets, and approaches are, there is no reason why you, too, can’t use them to ease the process and give you more favorable reinsurance options than you ever thought possible!
While I will outline multiple points over a special series of monthly blogs, let’s begin to look at just three in this first issue:
1. Turn your “talk radio station” from WIIFM to WIIFT! (”What’s In It For Me?” to “What’s In It For Them?”)
Of course, I’m not talking a literal radio station; I’m talking about changing your mindset and perspective before you even reach out to talk with reinsurers. Get this right and you will achieve maximum “buy-in” with them and peak their interest. Get this wrong and you won’t be able to influence them to buy you lunch. That’s why I am listing this as #1 on this list!
While it’s only natural to begin talking points from your own mutual’s benefit perspective, many of these will not grab a reinsurer’s attention. Examples of these non-WIIFT talking points might include the age of your mutual, surplus, number of agents, policy counts, etc.
Rather, mentally move over to “their side of the table”– before any communications begin– and plan out the primary, specific talking points that will be of major interest to them. This is where you start your conversations!
These points might include:
• A consistent history of past reinsurer profitability on your mutual’s account
• Recent (and past) rate, deductible, and underwriting changes
• Plans for consistent, careful growth into outlying territories to better spread your risk
• A no-nonsense, 5-Year Strategic Plan outlining 3-5 specific, financial benchmark targets
• Current and future challenges anticipated
• The plan your manager, board, and staff have already adopted to overcome these anticipated challenges.
Your goal should be to hear a reinsurer say, “Really? Tell me more!” That way, you know you have the stage properly set for meaningful dialogue and positive outcomes!
2. Get off the bench early– grab the ball– and start playing “Offense”!
When you want to begin proposal communications with a reinsurer, mentally adopt a mindset, demeanor, and “posture” of confidence and initiative throughout the process. Get going. Start the process early when both parties still have the luxury of time. Reach out to them and get an appointment booked! Don’t wait for them to call you. Timidly waiting and procrastinating until the last minute is never a good idea and almost always guarantees your options will be limited or non-existent!
I always say, “Confidence is attractive! Lack of confidence is a turnoff.” (Write this one on your hand, staple it to your walls, and drink 2 large glasses of this every day!) Many mutual managers and boards somehow feel they are powerless victims when it comes to reinsurance and competition in today’s world. Stop it! You have options. You are NOT a victim. You start to become a victor each time you confidently grab the ball and head toward your goal of success!
3. In confidentiality, share your detailed, 5-Year Written Vision.
This document is simply the end result of your mutual’s management and board taking time to “paint a concise, detailed word-picture” of what you all agree you want your mutual to look like in five years. As you begin discussions with reinsurers, review a copy of this with them in strictest confidence. (It’s your “playbook” and you don’t want others to gain access to your future success secrets). I have yet to hear that a reinsurer is not impressed by a mutual who has their Vision in writing!
There are three critically important reasons your mutual must have a Written Vision to share with your reinsurer:
• Reinsurers want to see the “fire in your belly”!
They want to see that your manager and board are prepared and poised for the future and have thought things through on their own. Reinsurers want to team up with “winners”: they want to sign on with a mutual that knows what they envision, want to build, and want to become.
• A Strategic Plan alone is NOT enough!
If you were to build a house, you would search for a picture of one you like best and then acquire the plans to make it a reality. You wouldn’t start by purchasing plans and proceeding to build the house and then see what you end up with.
Likewise, a Strategic Plan alone isn’t enough – You need to start with a Written Vision!
Too many questions arise during the building process because others involved can’t see the result. In a similar fashion your mutual’s Plan simply outlines what you will do toward your Plan outcomes and objectives. It’s basically a list of to-do’s and assigns ownership of actions and timelines. Don’t get me wrong. You need a Strategic Plan, but a Plan alone is like starting with a set of confusing black and white instructions with no pictures and no end in sight to celebrate. It doesn’t answer the plethora of questions that arise from those with a stake in it. Conversely, just like a product, it comes with great packaging that includes plenty of pictures that fill in the details along with a box with colorful graphics showing people enjoying the assembled product. You want to buy it. If others like it, they naturally want to enjoy it too. The same is true for your mutual and your mutual’s need to have a Written Vision to get your reinsurer’s full attention and understanding!
• The majority of your mutual peers don’t have a Written Vision!
If you are serious about helping your mutual stand shoulders above in the crowd of your peers, creating a Vision document is a great way of doing this. This is documented proof that you are serious about the details of your future. Which mutual will attract more interest from reinsurers?… A mutual who knows what they want for their future, or one who doesn’t?
Want to find more powerful secrets to attract reinsurers? Stay tuned for next month’s blog / audio cast where we will dig deeper and uncover more “gold nuggets”!
All my best to you,
Jack C. Randall, CIC, PCLA, PFMM
I will be presenting many more points on this very subject on November 11th at the Missouri Association of Mutual Insurance Companies (MAMIC) convention in Columbia, Missouri. I hope to see YOU there!
Want to know more?
- Specific questions about the content of Jack’s article?
- Info about having Jack assist you in creating a Written Vision for your mutual?
- Info about Jack’s other specialized services available to mutual insurance companies?
Simply email Jack at: Jack@RandallResourcesInt.com or phone him at 816-617-4823.