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What do insurance buyers value most?

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What do insurance buyers value most?

CHICAGO—The five companies earning top honors in Business Insurance's first Buyers Choice Awards program were ones buyers would recommend to peers as demonstrating the service and expertise attributes they value most.

A look at the attributes buyers most associated with the various top honorees, however, often speaks to the differences that companies of various sizes hold most important in doing business with insurers, brokers and third-party administrators.

The top five honorees in the inaugural Buyers Choice Awards are Chubb Corp., recognized as top insurer by mid-market buyers; Chartis Inc., selected the top insurer by large buyers; Willis Group Holdings P.L.C., the top broker as chosen by mid-market buyers; Marsh Inc., the top broker identified by large buyers; and Sedgwick Claims Management Services Inc., chosen as the top third-party administrator by mid-market and large buyers.

Speaking at an awards dinner for the Buyers Choice honorees last week in Chicago, Frank G. Racioppi, senior vp at WNS Global Services in New York, which assisted in analyzing the Buyers Choice data, noted that there were three “naturally occurring” sizes of buyers who participated in the survey: above $3 billion in annual revenue, $500 million to $3 billion, and less than $500 million in annual revenue. “Across the three segments, we find different attributes to be preferred,” he said.

“I think for large buyers, the deliverables and needs are different,” said Timothy J. Cunningham, principal at OPTIS Partners L.L.C. in Chicago. “The smaller astute buyer needs much more hands-on stuff.”

Examples of that phenomenon might be found in Chubb's selection as top insurer by mid-market buyers. Smaller buyers—those with less than $500 million in annual revenue—ranked Chubb at the top in several service attributes, including demonstrating reliable customer service and responsiveness, providing timely claims payments and providing timely delivery of policy documents.

Chartis, meanwhile, ranked highly among buyers with more than $500 million in numerous key expertise attributes, including timely innovation to meet emerging or evolving risks and possessing and leveraging broad product expertise.

Among brokers, Willis, the top mid-market broker honoree, was cited most frequently by small buyers in several key broker service attributes including demonstrating trust, integrity and reliability; offering in-person customer service and responsiveness; transparently disclosing all applicable fees and commissions; and facilitating timely, informed renewal discussions.

“At Willis, we're also talking about Hilb, which helped them move down into the middle market,” said John W. Wicher, principal at John Wicher & Associates Inc., citing Willis' 2008 acquisition of Hilb Rogal & Hobbs Co.

“You can get into a discussion of what that mid-market means,” Mr. Wicher said. But, he said, “That client is probably going to have a different set of skills that they're looking to their broker to provide.”

Smaller buyers are “going to lean heavily on their broker,” he said. Meanwhile, at a large-revenue buyer, “You're looking at your broker to transact,” Mr. Wicher said. “What you really need from a broker like Marsh or Aon (Corp.) is the ability to transact on a worldwide basis.”

Large buyers “need big-picture, robust stuff,” said Mr. Cunningham. “They're professional buyers. They're risk managers.”

Offering international services and coordination was among the service attributes in which Marsh was cited most frequently by buyers with more than $3 billion in annual revenue. Marsh also rose to the top as the most-mentioned broker among numerous expertise attributes among buyers with $500 million or more in annual revenue.

“Brokers tend to tune themselves to (the) needs” of different sizes of buyers, Mr. Wicher said. “And looking at the survey, that tends to bear that out.”

“On the broker segment...what makes for a great broker is one that can help a client identify an exposure and help a client find a solution to address that exposure,” said John L. Ward, CEO at Cincinnatus Partners L.L.C. in Loveland, Ohio. “The smaller the customer, the more help they might need to identify the exposure and determine where the exposure is.”

Mr. Wicher noted that geographic footprint often is a key consideration for large insurance buyers.

“The larger the organization and the larger their footprint, they want a broker who complements their footprint geographically,” he said. Likewise, a third-party administrator handling a company's self-insured program across numerous states also would need appropriate geographic reach, he said.

Mr. Ward said that when he was involved as a TPA investor and board member, a key area of emphasis was “information reporting and analytics, and I think that came through in (the) study.”

Indeed, for the largest buyers in the Buyers Choice survey, using cutting-edge technology and reporting to achieve real-time claims information and communication emerged as the top TPA service attribute.

The inaugural Buyers Choice Awards replaces Business Insurance's previous Readers Choice honors. The changes in approach, which include employing an independent market research firm to survey buyers, are intended to bring maximum transparency to the process and put the program's focus on what buyers value most in their industry partners.

Buyers were asked to rank seven key service and seven key expertise attributes in evaluating insurers, brokers and TPAs. Business Insurance compiled the lists of key attributes by studying other industry surveys and querying risk managers for suggestions on what they consider key attributes to assess brokers, insurers and TPAs.

Once buyers ranked the key attributes, they were asked to name the companies they'd recommend for each, yielding the Buyers Choice honorees.

The top overall honorees—Chubb, Chartis, Willis, Marsh and Sedgwick—were determined by being the companies in their categories that were most often mentioned by buyers as the companies they would recommend to peers across service and expertise attributes.