Second-hand story:

A colleague of mine was at the bar before dinner with a client and a few others. A reinsurer walks in (reinsurers sell, client buys, we’re in between) and this client, a rambunctious sort, challenges him:

“So, [blank], what do you think about BROKERS?”

“Honestly?… I think they slow things down, cost money and favor the client.”



Let’s break it down. The third point is irrelevant: there’s no such thing as impartiality and besides, at the margin, buyers have more power than sellers in commodity businesses.  They can take their ducats elsewhere all to easily. We’re supposed to favor the client, dumbass.

The second point is (as they say) what it is.

The first, though? That’s not playing nice-nice, is it.

But even as narrowly and stupidly put as it is, it’s still not really a burn. Negotiation is a tricky business* and it isn’t obvious what helps and what doesn’t. Sometimes, slowing things down is a good thing. Most times, brokers play a role SOMEBODY has to play and, if not for brokers ready to take the blame, you’d be bitching about slow internal processes at the client for generating the data.

Our friend [blank] was probably stirring the pot, though, because he decided to completely overlook what we actually do.

We’re matchmakers. Building and servicing a network of people that buy and sell hundreds of millions of dollars of reinsurance every year takes a lifetime. It’s a weird job, for sure, but one that has withstood the ultimate test, competition from direct (ie non-broker) markets, for generations.

It’s very hard to create economic value. Very very hard. It’s also hard to identify economic value sometimes.

Luckily money talks.

*(TED has loads of good stuff on this, from a related field.)

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