Triangular Risk Management (TRM)
Triangular Risk Management (TRM) represents the relationship between the insured, carrier and agent or broker. For the purpose of TRM, relationship is defined as the degree to which all three parties collaborate to protect the assets of the business. The degree to which all three parties communicate, respect, trust and admire each other. The degree to which each party is working for a common purpose – to improve the organization’s Risk Profile.
Sample components of TRM include:
- Each party understands and values the characteristics, professional standards and quality measures of their business partners.
- Adequate time is allocated to build relationships.
- Customer relationship management strategies outside of the boundaries of the 90 day bidding cycle (i.e., risk management service plans, stewardship reviews, claims management initiatives, etc.)
- Benchmarking risk profile improvement initiatives.
- Education on pertinent insurance and risk management issues.
Triangular Risk Management relationships can best be viewed as a three legged stool – sturdy, balanced and able to support weight. If one leg is too short, the stool becomes wobbly. Eventually, the stool will fall over. A successful, long lasting relationship between an insured, carrier and agent or broker must contain balance and strength.
TRM is not a short term commodity sale but a long term management partnership.
TRM is common with Fortune 500 companies. A seasoned Risk Manager understands that a synergistic relationship between his or her organization, the carrier and agent/broker is essential. The Risk Manager cannot adequately perform all essential risk management functions without the teamwork and commitment of all three parties. Components of the relationship include service plan development, claims reviews, risk mitigation strategies and stewardship reviews with a heavy dose of benchmarking and accountability. Fortune 500 risk managers demand a synergistic relationship to confirm that the assets of their organizations are properly protected and managed. All three parties must actively participate in all aspects of the risk management process, including but not limited to, exposure identification and risk mitigation.
If TRM is so vital to Fortune 500 companies, why do the majority of middle market focused agencies shield their clients from intense, long lasting and fun relationships with their carriers? Why do insurance carriers allow insureds to view them as an interchangeable part of the insurance bidding game? Don’t carriers realize that TRM can enhance loss, expense and retention ratios? What has impeded the smartest and most cutting edge agents and brokers from TRM? Don’t they realize that TRM can stimulate organic growth and enhance agency profitability? I would suggest middle market focused agents and brokers evaluate TRM’s potential impact on key agency indicators including outside competition on key accounts, retention and per employee revenue.
Upon further examination of the unfortunate situation between Stephanie and the Client Shield Agency, we see clearly that the relationship was built solely upon price and product. All three parties allowed the “Commodity Trap” (the insurance bidding cycle) to control the relationship. Had CSA’s President understood benefits of TRM, he would have created the opportunity for his clients to build relationships with Stephanie and other representatives of her team. Stephanie most certainly would have dazzled the insured and prevented the need for outside competition on these three accounts. The outcome would most likely have been dramatically different. If a consumer has the opportunity to gain an appreciation for an underwriter’s professional talents, TRM takes hold. Rather than losing market share, Clients Shield Agency would be sitting comfortably and confidently on top of a balanced and sturdy stool.
I would like to challenge you to see through the eyes of the typical middle market consumer. Do they view the insurance carrier as a business partner or simply faceless organization attached to a competitive bid? You know the answer.
In my next post I will explain how to begin the TRM process.