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Functional Risk Management for Producers

Last week when I spoke in Denver, Colorado at the One City World Tour from the IGP Insurance Guys Podcast, I talked about the difference between tactical risk management and functional risk management.  I promised I’d do a blog post when I got back and give that group the resources they need to get better at the point of sale.

Last week, I had the distinct honor and privilege to speak at the One City World Tour brought to you by GloveBox and the Insurance Guys Podcast, my good buddies, Bradley Flowers and Scott Howell.  When I talked, I talked about some tools that you as a producer could use immediately to change the way the game gets played.

What Differentiates Good Producers?

One of the biggest things that differentiates a good producer from an insurance salesperson is that outstanding producers take the time to learn every facet of a prospect or a client’s business to represent them most accurately.  One of the things that a good producer does is walk around and look.  They ask to tour the production floor or go out onto the sales floor.  They want to interview employees, mid-level supervisors, and upper management so that they can get their fingertips on the pulse of the culture of their client and prospect.

They learn about programs, processes, procedures that these companies are using to get results, or they’re missing things, and they’re not getting results.  But it’s a really fine line that you have to walk because we’re not going to be experts in loss control and safety engineering and all of those things, at least not in most cases.  Those are the things you’ve got to leave to the professionals. That’s what I call tactical risk management.  Those are the people who will come in for the heavy lifting.  They may do noise studies.  They mad perform infrared thermal scanning of equipment to ensure that it’s not overheating from a mechanical breakdown perspective.  Perhaps they would come in and look at a workstation to ensure that it gets set up correctly or that everybody’s trained and cross-trained, so there’s a rotation of duties.  We don’t have to worry about repetitive motion claims from an ergonomics perspective.  They handle all of that stuff that’s, really, really hyper-focused deep dive for which you need an expert. 

What Should Producers Do?

But there are a lot of things that, as producers, we can do ourselves that are going to give us more credibility when we bring it up, and it’s also going to help us show an underwriter that we’ve taken the time to get out and walk around and look at stuff.  So functional risk management is what we as producers can do.  Functional risk management, functional loss control, whatever you want to call it, it’s what we can do on the fly to add value to our clients and prospects immediately.

Now, I’ve talked about a few of these things, but it’s just what you can notice when you’re taking your tour.  But I am going to give you an opportunity.  I created a slick. It’s the top 10 things a producer can do when going into an account from a functional risk management perspective.  But the one thing I’m going to challenge you is don’t rely on my list; create your own.  You can use mine as a baseline for what you’re going to do, but the best way to get better at functional risk management is to make it a point to attend every single carrier loss control visit you can.

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Now, our carriers have outstanding loss control reps in most cases, but they’re always looking for very specific things when they go in, and they’re not looking at things that will impact the total cost of risk the way we talk about at the point of sale.  Most of the time, it’s a checklist. It’s the boxes that need to be checked and looked at to show that they visited, that the client or prospect is in compliance, or they’re not.  But you can learn what those things are by simply being present for your client and then remembering what they are.  Then you can add them to your list because if you can adequately represent they are already addressed on the front end many of the things you know that carrier is going to look for when they go for their visit, you’re going to look like a rock star.

What Can I Start Doing Today?

I’m not advocating that you change your career. You’ve got to sell to be able to make money.  But if you want to sell better, if you want to have a higher close rate, if you want to have higher retention, embrace functional risk management as a producer. Don’t stop at the conference room when you go into these accounts; look at the whole flipping thing.  Drive around the perimeter of the building before you park. It’s an old habit from the grocery days, but you’d be amazed how many things you can see from a risk management perspective by simply driving the perimeter of your client’s building before you park in the parking lot and walk in.  I talk about that in my book, The Extra 2 Minutes.

Listen, this will be a new thing for many of you.  Embrace it, try it, make it awkward for you.  If you’re not feeling uncomfortable, you’re not growing in this business.  But if you embrace this stuff, all the awkwardness goes away, and you’re going to kill it in commercial insurance.

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