We have been talking about trusted risk advisors for years. How do we know whether we are developing them? Start with the client file.
If an experienced insurance executive opened a commercial client's file tomorrow, what would it reveal? Would it demonstrate a thoughtful process for understanding the client's business and managing its risks? Or would it primarily contain applications, quotations, policies, endorsements, certificates, loss runs, emails, and renewal instructions? Those documents are necessary. But they principally document an insurance transaction.
A risk advisor's file should document how the client's risks were identified, evaluated, discussed, and addressed. Agency and carrier leaders should be able to see that work when they review it.
For years, insurance industry leaders have urged agents and brokers to become trusted risk advisors rather than simply take orders and compete on price. My passion is helping insurance professionals develop the knowledge and judgment to understand a client's business, recognize exposures the client may overlook, and help management make informed decisions about risk. Their value extends beyond placing coverage to evaluating alternatives, recommending practical solutions, and following through as the business changes.
For agency and carrier leaders, putting that vision into practice requires training, resources, and accountability that support advisory work. And when an agency tells me its producers are risk advisors, I want to know what they actually do differently.
What the Client File Reveals
Consider a growing regional contractor. A conventional insurance file will probably tell us its payroll, revenue, vehicle count, equipment values, subcontractor costs, loss history, and current insurance program.
Now consider what may have changed since the last renewal. The contractor has entered two new states, taken on larger projects, and accepted broader indemnification obligations. Employees are using personal vehicles for company business, and growth has outpaced the last review of property values and business income needs. Would the file reveal those changes? Would it show what anyone did about them?
These are not merely underwriting questions. They are business risk questions. And they illustrate why the distinction between selling insurance and advising on risk matters. Business decisions can change a client's risk profile well before the insurance program is reviewed. The risk advisor's job is to understand those changes.
In one matter I reviewed as an expert witness, the owners of a commercial building had requested a higher insurance limit. The agent recommended substantially less coverage based on a replacement cost estimate. After the building was destroyed by fire, the valuation became a central issue. My opinion was that the estimate relied on faulty information about the property and understated its replacement cost.
That experience is one reason I want to see more than a valuation report and a policy limit in the client file. What information went into the estimate? How was it checked? Why was less coverage recommended than the owners requested? What did the owners understand when they accepted that recommendation? A risk advisory file should help answer those questions.
The TRUST Framework
The TRUST framework provides a practical way to organize that work:
- Talk Before You Tell.
- Recognize Hidden Risk.
- Understand the Whole Picture.
- Solve Beyond Insurance.
- Track and Follow Through.
Agency leaders can use these five steps to review what is happening in their own client files.
Talk Before You Tell
It is easy to hear a client describe a problem and immediately start thinking about coverage. The harder discipline is to keep asking questions until we understand the business issue behind it.
A meaningful risk advisory process begins with discovery.
- What does the client actually do?
- How does it make money?
- What is changing?
- What are its critical assets and dependencies?
- What contractual obligations has the organization assumed?
The answers may have significant insurance implications, but they begin as business questions. A useful file records what we learned and what needs attention. Another completed checklist adds little if nobody acts on the answers.
Recognize Hidden Risk
Clients generally know they need property, general liability, automobile, and workers' compensation insurance. But clients cannot ask about an exposure they have not recognized. They need us to notice it.
Suppose our contractor begins temporarily storing expensive customer equipment during a project. Management may see this as a minor operational change. A knowledgeable risk advisor sees another question: What responsibility has the client assumed for property it does not own?
The exposure may ultimately be addressed through insurance, contractual arrangements, operational controls, or some combination of the three. But first someone must recognize it. A file containing only the resulting quotation would miss the most important part of the work: recognizing the exposure in the first place.
If premium placed is the only measure of success, the agency provides little organizational incentive to spend time on exposures that may never produce a policy. Agency leaders need to decide how they will recognize and support that work.
Carriers have a stake in this as well. Better exposure identification can improve submissions, give underwriters a clearer understanding of the risk being assumed, and help focus loss prevention efforts.
Understand the Whole Picture
We organize insurance work by coverage: property, liability, workers' compensation, and cyber. A client's business decisions rarely fit within those boundaries.
A contractor entering a new market may simultaneously change its contractual risk, automobile exposure, workers' compensation exposure, regulatory environment, and catastrophe exposure.
A company acquiring another business may inherit property, employees, contracts, cyber vulnerabilities, and liabilities that were never contemplated when the existing insurance program was designed.
The advisor must therefore see the client as an enterprise rather than as a collection of policies.
Carriers have underwriting, claims, and loss control expertise that can help producers recognize these connections. How much of that knowledge reaches the producer before a loss, and how easily can the producer use it with a client?
A strong relationship between a carrier and an agency should involve more than the efficient transfer of submissions and quotations. It should improve the quality of risk information flowing in both directions.
Solve Beyond Insurance
A risk advisor must be willing to recommend a solution that does not involve selling a policy. Insurance finances some consequences of loss; it does not prevent the loss itself. A risk may need to be avoided, reduced, contractually transferred, retained, or controlled operationally.
Consider water damage. The insurance solution might involve reviewing property coverage, deductibles, limits, and exclusions. The risk management solution might also involve water sensors, automatic shutoff devices, preventive maintenance, or changes in where critical equipment is located.
Cyber provides an even clearer example. Buying cyber insurance without discussing multifactor authentication, backups, employee training, vendor controls, and incident response planning addresses only one portion of the problem.
An agent does not need to give legal advice to recognize that a contract needs legal review. The same principle applies to engineering, cybersecurity and safety issues: recognize the need and help bring the right specialist into the discussion.
For agency owners, that may require developing networks of outside expertise. For carriers, it creates opportunities to differentiate themselves through loss control, risk engineering, data, claims expertise, and other services that support the advisory relationship.
Track and Follow Through
A good risk review usually ends with unfinished business. Someone needs to verify values, obtain legal advice, investigate a coverage alternative, or make a decision.
What happens next? Too often, the answer is that the issue disappears into an email chain until the next renewal. A strong advisory process should establish:
- the issue identified;
- recommendations and alternatives discussed;
- the client's decision;
- information still required;
- responsibility for the next action; and
- a follow-up date.
At the next review, we should be able to see what was completed, what remains open, and why.
Technology can now gather data, prefill applications, assist with coverage comparisons, and automate routine communications. As carriers and agencies make the insurance transaction more efficient, they also need to ask where the producer adds value. If technology handles more of the transaction, what will clients need from their agent or broker?
I believe much of that value must come from something technology cannot accomplish by itself: understanding the client's business well enough to identify exposures, challenge assumptions, evaluate alternatives, and help management make informed decisions about risk.
The Question Agency Leaders Should Be Asking
Agency leaders frequently say they want producers to become trusted advisors. But organizations ultimately produce the behaviors their systems encourage.
Agencies routinely measure new business, retention, premium, revenue, and cross-selling. What do they measure about the quality of advice?
- Does the agency's account review process identify material changes in the client's business?
- Are recommendations and client decisions recorded?
- Are unresolved risk issues assigned and followed?
- Do producers have access to specialists when a client's problem extends beyond their expertise?
- Most importantly, if senior management periodically reviewed client files, would those files demonstrate an advisory process?
If the answers reveal little evidence of an advisory process, calling employees "risk advisors" does not make them risk advisors.
Carriers Should Be Asking a Related Question
Insurance companies have invested heavily in helping agencies transact business more efficiently. That investment should continue. But carriers should also consider how they can help distribution partners advise better.
Carriers possess enormous amounts of risk knowledge. They see claims across thousands or millions of insureds and employ underwriters, claims professionals, risk engineers, and specialists with expertise an individual agency could never replicate.
When claims experience reveals a recurring exposure, how does that information reach agents and their clients? When an underwriter identifies a gap, does the conversation end with a coverage requirement, or does it help the client understand the underlying risk?
Show Me the File
Borrowing the famous line "Show me the money!" from Jerry Maguire, I would say, "Show me the file." If we are building trusted risk advisors, let's see the evidence.
If I were sitting with the senior leadership team of an insurance agency that told me, "Our producers are trusted risk advisors," I would ask to see several client files. If I were sitting with a carrier that told me, "We help our agents deliver more value to their clients," I would want to understand exactly how.
The file should show what we learned about the business, which exposures we discussed, what the client decided, and who is following up on unresolved issues. If the file answers only "What insurance did we sell?", the relationship is still largely transactional. A true risk advisory file answers a much more important question: "How did we help this client understand and manage risk?"
Technology may give producers more time to advise. Whether they use that time well should be visible in the client file. Before we congratulate ourselves on building trusted risk advisors, let's open a few files and see.
