How to conduct an in-depth needs analysis to the benefit of your brokerage and your clients

Clients are the lifeblood of any business. Although a cliché, appreciation of this adage is critical to our survival.

Failure to properly fulfill clients’ insurance and risk management needs not only exposes insurance brokers to punitive consequences, but also threatens the sustainability of their livelihood. The first step in ensuring the long-term success of the broker-client relationship commences with the financial needs analysis.

It is the manner and proficiency by which this exercise is performed that will impact on the foundation of what is hoped to be a mutually beneficial commercial association. A rushed job leads to substandard cover and will inevitably translate into an unhealthy client-broker relationship. So how can you, the broker, positively steer the process?

This article aims to provide a broad and subjective overview for brokers who may wish to procure insurance for trucking clients. The broker will need to adapt the process to ensure that appropriate advice is given at all times. The suggestions made should be treated as commentary rather than set procedures, and are certainly not exhaustive.

Know your prospect
Aside from capturing the basic contact details, seek to understand the prospect’s vision for his business. Details will vary from the small independent owner or driver to the sophisticated fleet manager, but each business owner will be able to communicate his purpose. Understand it and conduct all engagements with commitment to serve the business aspirations.

Understand his operations
The nature of the operations should be thoroughly appreciated. So ascertain:
· The fleet composition,

· The nature of goods carried,

· Routes undertaken,

· Customers and suppliers,

· Details of fleet management,

· Composition of drivers,

· What stressors keep the operator awake at night.


Help the client uncover insurable risks
The average client will not have a comprehensive knowledge of the risks that ought to be covered. A thorough process of enquiry should follow. Some guidance in this regard:
· Identify contracts that are in place and the nature of those that are in the pipeline. Often agreements contain an insurance clause that fails to properly outline the actual covers required by the parties. Do not rely solely on requirements from any particular clause. Seek to establish appropriate covers by gaining a broader understanding of the risk and liability terms.

· Establish the consequences of a breakdown, including:

o The costs of repair and towing,

o The exposure to the commodities.

· Determine the full impact of a collision in terms of:

o Direct losses, and

o Indirect losses such as loss of further business arising from the consignor.

· Identify the impact of a write off, and the costs and ease of replacement.

· Identify the potential liability claims that could be made against the owner and driver arising from various causes.

· Attempt to identify and quantify all potential losses other than to the vehicle itself, such as:

o Spillage – clean up costs on the road and spills into rivers,

o Damage to property whilst on public roads,

o Losses caused whilst used as a tool of trade,

o Injuries to drivers and crew,

o Damage whilst on a construction site,

o Transit risks and the basis of appropriate indemnity – i.e. establish how the extent of contractual liability is to be determined in the event of a loss.


Investigate the causes of previous losses
· Ideally, an exercise should be conducted to determine the reasons for previous losses.

· Seek remedial solutions to mitigate the extent of the losses through the effective management of the risk. This exercise may involve the intervention of fleet management consultants or other such specialists, and would be systemically determined following diligent analysis.


Agree to criteria for procuring quotations
· Determine the basis of valuation required for the vehicle:

o Market value – this is a moving target and settlement on this basis may prove to be inadequate for the purposes of full replacement.

o Retail value – although a higher settlement figure will be made on a total loss, this amount may also not be sufficient to cover the outstanding finance payable together with replacement of a similar vehicle.

o Agreed value – this figure is ascertained at inception and removes the probability of partial indemnity at the time of a write off.

· Propose solutions for the basis of transit insurance.

o Cost or sales price?

o Whose cost or sales price?

The above figures will not always be easily determined, due to parties being unwilling to disclose margins. So establish a suitable claims settlement formula for negotiation with insurers, or at least communicate to the client the potential shortfall following the settlement of an insurance claim.
· Determine liability cover, including:

o Third party motor liability,

o General and tenants liability, including

§ Use of the vehicle as a tool of trade,

o Clean up costs – extent of full exposure of

§ Hazardous chemicals, and

§ Standard spillage,

o Cover on construction site,

o Obligations with regards to the Consumer Protection Act.


Agree to a selection of insurers that will meet the above criteria, taking note of:
· Track record on claims service,

· Financial stability,

· Specialist expertise, and

· Attitude to truckers.


Once the above exercise is completed, the broker will be well positioned to procure suitable quotations for appropriate cover. This prudent process will provide a foundation to elevate the status of the traditional broker to that of trusted advisor – a status that solidifies relationships and builds business from a sound and reliable platform.