Is (Re)Insurance still a relationship business?
There is plenty of talk about relationships driving the business world and insurance is no different. Hence the historic need for a good golf game – a way to establish and develop good relationships. For years, those more senior, mentors, and leaders talked about the insurance business being a relationship business. “Work on expanding and growing your relationships”, “It’s a relationship business”, “the most important thing is our relationships”, are examples of statements and advice that I have heard countless number of times. But I am starting to wonder is (Re)Insurance still a relationship business?
Or has something changed?
Will it change?
Is this still good advice?
There are a number of pressures causing people to jeopardize or think twice about the value of the relationship:
There are countless pressures on individuals and companies to produce more and increase profits, to do more with less…these pressures are sometimes in the face of or at the cost of a relationship. If the numbers don’t support a decision, it is sometimes tougher to validate based upon a relationship or an unidentifiable or non quantified ‘IOU’ or ‘chit’ to be named later. Only the Godfather and maybe private/non publicly traded firms can count on favors as currency these days.
The pressures from InsurTech has (Re)insurance firms looking to cut costs and use more technology efficient platforms to transform their businesses – also weakening the stability or foundation of the relationship business. Everyone is a little less comfortable in their own skin with InsurTech and M&A discussions abundant. This has individuals wondering “what this change means for me?” sometimes as the cost of trading relationships.
There has been talk of value chain compression and distruption which doesn’t help forge relationships with counter-parties, rather it has everyone looking over their shoulders.
Culture in business has changed. More than the superficial differences you see in Mad Men (i.e. attire, or smoking and drinking in the office).
Some companies’ cultures frown upon full days out of the office with clients – i.e. golf or client events. Therefore, not establishing the relationships that were once the core of the business. When entering a difficult negotiation or discussion, it was always helpful to have pre-existing context or relationship to build upon at stressful times. Or to make the discussion more than the single transaction. But this taboo or culture around being out of the office may be costing firms in the long run.
Abundant capacity and capital, have firms considering partnering with alternative forms of capital trying to enter the industry. All to save a buck. Harming existing relationships with incumbents or threatening to leave and changing the relationship.
The reoccurring trend and question is: Is short term thinking and quarter to quarter management of companies/careers bad long term?
Will this style, hurt relationships and the business/career long term?
My thought is YES!
Losing focus on the relationship is a short term mentality that effects all parties. We are all guilty, buyer/seller/intermediaries etc. No matter where in the value chain at times – we are all guilty. We can’t let these pressures get the better of us.
This will hurt the business long term and also your career. In the risk trading business, you need to be able to trust and count on your counter-parties. That you will each be able to come back to the negotiating table in good faith with the goal of making it a mutually beneficial long term relationship.
So Yes – (Re)Insurance is still a relationship business but those relationships are being stressed by pressures. This is actually the time to forge deeper, stronger relationships as we are all going through similar stress.
In the future customers may be able to establish trust and relationships with online brands or InsurTech firms more quickly and easier than prior generations, but for now – their is still the personal element to this business/industry and it is something to embrace.
If you view your self as just an intermediary/capital/etc. and don’t think about the holistic relationship, you will be treated as such on the other side of the negotiating table.
It is the opportunity to set you and your firm apart.
Focus on improving a relationship a day and you will be happy with the results.