A systems view of relationship dissolution

Atelier 2 : Engagement et Désengagement dans la Relation

A SYSTEMS VIEW OF RELATIONSHIP DISSOLUTION

Ahmed BELOUCIF Professor - Aberdeen Business School - The Robert Gordon University Aberdeen - UK [email protected]

Bill DONALDSON Professor - Aberdeen Business School - The Robert Gordon University Aberdeen - UK [email protected]

Michaela WADDELL AVC Media Enterprises - Aberdeen - UK [email protected]

Abstract : This study aims to examine the process of termination of a business relationship between insurance brokers and their corporate clients in the UK insurance industry. In previous studies, it has been widely recognised that a business relationship goes through different stages and arguably its ending emerges mostly at the last stage of the process. In this paper, we argue that due to the nature of the cyclical process termination can take place at any time or stage through the whole relationship development process. Significant points are identified where the relationship is most vunerable. Based on five in-depth interviews with senior insurance brokers, theses ideas are tested in a number of settings Key Words : Business relationship, insurance industry

A systems view of relationship dissolution

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1ères Journées de Recherche en Marketing IRIS l IAE de Lyon, 4 et 5 avril 2005

INTRODUCTION Although the relationship paradigm has come to prominence in marketing theory and practice in recent years, relationships vary in many ways but particularly by type and duration. Various scholars have attempted to describe and explain relationships and a continuing theme in the literature is the stages in a relationship. Emanating from both a US perspective (Dwyer, Schurr and Oh, 1987) and a European vantage (Hakannson, 1982; Turnbull et al, 1995) stages have been identified and explained in different situations and contexts (Yorke, 1990; Halinen, 1997). In this paper, the financial services sector, in particular the client broker relationship between small, medium enterprises (SME) and their insurance brokers is used to identify stages in their relationships. Background of the study Since late 1980s and early 1990s, there has been an increased interest towards understanding business relationship termination (Dwyer et al, 1987; Gadde and Mattson, 1987; Hakansson and Snehota, 1995). The number of relationship termination studies has rapidly increased. Thus, a number of concepts referring to the relationship ending have emerged such as: dissolution, termination, switching, breakdown. Tahtinen and Halinen (2000) argue that “the use of various conceptual languages is also a reflection of the different disciplinary backgrounds of the studies. Researchers are approaching relationship endings from different theoretical perspectives and producing knowledge based on different assumptions. However, there has been hardly any research of relationship ending in the insurance broker area (Beloucif and Waddell, 2000; Beloucif, et al., 2004). Research methodology This paper intends to limit itself to the ending of exchange relationships between an insurance broker and the corporate client. Moreover, this study does not start with an established model of relationship dissolution and try to prove it. Rather, it begins with the study of the area of insurance broker- client relationship and what is relevant to the disengagement is allowed to emerge as advocated by Glasser and Strauss, (1969). Dwyer et al (1987) point out that “Exploratory, inductive work that classifies many relationship dissolutions seems potentially productive for evaluating the efficiency and effectiveness of the processes” (p.23). In this paper, of primary importance is the exploration of dissolution process in the area of insurance brokerage through the development of an explanatory model. Based on qualitative research (Gabriel, 1990; Swan, 1985 and Strauss & Corbin, 1997), insights are obtained from the insurance broker’s perspective. Therefore, the aim is to explore the key issues leading to breakdown of relationship between insurance brokers with their corporate clients. The following research objectives are used to develop this conceptual framework for relationship dissolution using a systems approach: 1. To identify the types of influencing factors in the interaction process? This is examined through the input factors from both broker and client. The nature of these influences and their role in ending business relationships are examined from a systemic approach. 2. To outline and critically discuss the relationship endings. The development stages as well as endings phases are identified and discussed. Relationship Dissolution literature As noted, stages in a relationship have received a good deal of attention. In turn, interest in the opportunities to dissolve a relationship and the causes associated with this need to be further explored. A strong relationship with customers gives the supplier of a service a competitive edge and this quality relationship, itself, determines whether or not the relationship will continue in the future (Turnbull et al 1995; Crosby et al, 1990 and Christopher et al., 1991). High relationship quality means that the customer can rely on the organisation’s integrity and has confidence in them because the level of past performance has been consistently satisfactory. Relationship marketing theory proposes that relational

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A systems view of relationship dissolution

Atelier 2 : Engagement et Désengagement dans la Relation factors are principal antecedents to positive relationship outcomes (Ganesan, 1994; Morgan and Hunt, 1994). Over the past decade, many practitioners and scholars have identified trust, commitment, satisfaction and other dimensions as essential ingredients for the development of quality relationships between buyers and sellers within the context of business-to-business relationships (e.g. Dwyer et al ,1987; Anderson and Narus, 1990; Bejou and Palmer, 1998; Gronroos, 1993 and, Tzokas and Donaldson 2000)). Based on these works, one conclusion is that relationship quality is made up of three relational constructs - trust, commitment and satisfaction, (Garbarino and Johnson 1999) which are developed with the existence of effective communications between two parties and high service quality provided by a supplier, in this case an insurance broker. Business relationship ending has been the interest of many academics and practitioners in various areas and different approaches were used to explain this phenomenon. Some writers examine this subject from a relationship marketing perspective (Dwyer et al, 1987; Giller and Matear, 2001; Perrien et al, 1994; Perrien et al, 1995 and Hocutt, 1998) others from an economic perspective (Hirschman, 1970) and finally from sociology and social-psychology (Duck, 1982 and Baxter, 1985; Havila and Wilkson, 1997; Tahtinen, 1998). Dwyer et al, (1987, p.19) point out that “the possibility of withdrawal or disengagement has been implicit throughout our relationship development framework... The model is a powerful analytical perspective, but it leaves unexplained the process of dissolution,” They go further by stating that there are probably several trajectories for dissolution and there is a risk of oversimplification by devoting stages of relationship development while consolidating termination into single phase. It has been widely recognised that early work on dissolution such as that carried out by Baxter (1979, 1983) and Baxter and Philpott (1982), was based on the seminal work of Duck (1982). “There are obvious shortcomings in current research regarding the ending process. There is still no available process theory or sufficient process description of business relationship ending... there is no comprehension description or categorisation of the factors that influence relationship endings” Halinen and Tahtinen (2002, p.164) Tahtinen and Halinen (1997) identify and categorise the influencing factors into three classes: the predisposing factors, precipitating events and the attenuating factors. They also argue that these factors are expected to influence a managers’ decisions and actions in the relationship ending process. In this study, the stages of relationship development are examined, their main characteristics explained and the managerial issues are assessed which influence factors in business-to-business relationships. Therefore, this paper attempts to link relationship development to ending stages.The first priority is to describe and explain the nature of the relationship between a broker and their client. Bear in mind that the client is usually a SME and a variation of existing stage models has been adapted to apply in this context. The result is that some of the terminology and the relative importance of timing is different in a services context and for insurance in particular. This is important for two reasons. Firstly, the relationship is industry specific in both time and in the nature of the interactions. Although this diagram describes the process it is restricted to a technical explanation of the relationship not a qualitative one. However, this study will reveal that quality in a relationship is also vital to successful outcomes. Secondly, the whole process is a cyclical relationship that has a beginning and end and will be reviewed regardless of broker performance. Therefore it is more appropriate to refer to it as a relationship within a transaction, rather than a series of transactions leading to a relationship. It is here that the conventional relationship approach needs to be reconsidered.

SYSTEMS APPROACH: A RESEARCH NOTE Explaining behaviour within a social system can be classified as the system-structural perspective (Rucker and Walker, 1987). According to (Van de Ven, 1976; Nauman and Lincoln, 1989; Zeithaml and Zeithaml, 1984 and Leimberg, 1989), this perspective which is widely spread within both organisation theory and marketing literature, holds that a social system can be examined by exploring the interrelationships among its environment, its relationship structure and process, and its outcomes. Using a system-perspective, many researchers have adopted this approach to examine relationships (i) between autonomous organisations (Frazier, 1983; Dwyer et al., 1985; Achrol et al., 1983 and Van de

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1ères Journées de Recherche en Marketing IRIS l IAE de Lyon, 4 et 5 avril 2005 Ven, 1976) and (ii) between individuals at different levels within a single organisation (Zey-ferrel, 1981; Astley and Van de Ven, 1983 and Ruekert and Walker, 1987). A systems approach in marketing is not a new phenomenon (e.g. Alderson, 1950; Fisk, 1967; Fisk and Dixon, 1967). The literature on channels and buyer-seller relationships stresses the importance of the open system approach, i.e., the interaction of the organisation with the environment (Dwyer and Welsh, 1985; Beloucif, 1997; and, Achrol et al., 1988). According to Gronroos (1990), the relationship approach to marketing is based on a system approach, introduced in marketing by Alderson in 1950. This current paper shares the same view and believes that the perspective is also useful for understanding not only broker-client relationship development but also its dissolution. Moreover, we share also the views of Halinen and Tahtinen, 2002: “we view relationship ending as a process where these links, ties, and bonds are broken, disconnecting the former parties from each other. When all activity links are broken and no resource ties or actors bonds exist between the companies, a relationship can be considered dissolved,” (p.166) Therefore, this paper outlines the major dimensions of the conceptual framework describing the interaction and dissolution process between the insurance brokers and their corporate clients on the basis of a system-perspective using (1) situation dimensions, 2) structural and process dimensions; and 3) dissolution outcomes). Figure 1: A Systems Perspective of Relationship Dissolution Situational Dimensions

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

Intervening variables Personal initiative Networking/ referral Details of existing covers Initiative discussion Information Collection Cost Benefits Quotations Insurer contacts Contacts & Discussion Confidential information Broker acting as an agent Quatations/ amendements Account handler Possibility to cross-sell Information exchange Standards setting Insurer carrier advised Personal allocated Proactive approach Ensure standards are met Regular contact Instructing brokers Client abbreviation Claim notiofication Review of premium financial options Require face-to-face meeting Financial projections for 12 months Policy changes Trouble phase Buisness failure Acquisition & Merger

Structural & Process Dimensions

Contacting

Prospecting

Outcomes Dimensions

Ending

Ending

Tendering Ending

Contracting

Pre-renewal

Ending

Ending

This study of client-broker relationships has been conducted in separate phases. Some initial qualitative interviews were held with insurance brokers to describe and evaluate the process with the interest

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A systems view of relationship dissolution

Atelier 2 : Engagement et Désengagement dans la Relation being an understanding of relationships in this context. To confirm the different stages, characteristics and decision points a quantitative survey of clients (SMEs) was undertaken with 47 respondents. This data, reported elsewhere (Beloucif, Donaldson and Kazanci, 2004), confirmed that the specific context was different for services and for insurance within the service sector. Excited by some of the idiosyncratic findings further qualitative interviews were held with five brokers in the North of Scotland to confirm the description and characteristics of the relationship and review the ending process in particular. From this stage, but incorporating the previous research, a conceptual model has been introduced with the focus on opportunities for continuation or termination of the relationship. It is to this model and the interpretation of findings that we now turn.

THE CONCEPTUAL FRAMEWORK The conceptual framework of insurance broker-client dissolution contains three main dimensions (1) the influencing factors of process (stages characteristics and management issues) identified through the dissolution process (2) two distinct phases in the dissolution process (new relationship: stage 1 & 2; and mature relationship: stage 3, 4 & 5); and, (3) the relationship ending outcomes. Environmental Analysis Situation – This describes the context in which interaction between insurance brokers and their corporate clients takes place. It also includes two dimensions, internal environmental conditions and external environmental conditions. It is beyond the scope of this study to examine the external environmental conditions such as financial regulations, watchdog etc. It is the intention to focus only on the key internal influential factors to the interaction. The intervening variables in the internal environment emerging from both insurance broker and corporate client, studies are summarised as system input in figure.1. These intervening variables in the internal environment have a direct influence on the interaction process (contacting, prospecting, tendering, contracting and prerenewal) and consequently on the continuity of the process or relationship ending. Structural and Process dimensions - A growing body of literature deals with relationship dissolution in B-to-B marketing (Dwyer et al 1987; Tahtinen, 1998; Tahtinen and Halinen, 1999; Halinen and Tahtinen, 2002). Nevertheless, there is still no agreement on the universality of such models. In terms of client-broker relationships ending, two stages were identified through the relationship development process; the information gathering process and the more formal relationship phase (Beloucif et al., 2004). Based on observations of this actual process, a conceptual framework of relationship ending has been developed as shown in figure 2.

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1ères Journées de Recherche en Marketing IRIS l IAE de Lyon, 4 et 5 avril 2005

Figure. 2: Relationship Dissolution Phases Broker’s Inputs Process

• • • •

Personal initiative Networking Details of existing covers Time scale / renewal claim date

Client’s Inputs

Relationship Ending

• •

Referral Contact / Personal initiative • Networking

Start 1

New Relatiobship

Contacting • •

Initiative discussion Information collection • Cost benefits • Quotations • Insurers contacted

Ending

Outcomes Yes

2

No

• •

Discussion Providing confidential information • Frequent contacts

Prospecting Ending

Outcomes • • •

Yes

Broker acting as agent Quotation/ amendments Client’s organisation name used • Assigning account handler • Possibility to cross-sell

3 Tendering Outcomes

• • • •

No

Insurance carrier advised Personal allocated Proactive approach Ensure standards are met

• • • •

Checking quotation Providing information Standards are set Aware of Account

Ending

No

4

• •

Yes

Regular contact Instructing broker

Contracting Mture Relationship

• • •

Client abbreviation Claim notification Review of premium financial options • Require face-to-face meeting

Ending

Outcomes Yes

Full Relationship / Client Abbreviation

No

•

Provide financial projections for 12 months/ business plan • Policy changes instructed

New Service Offerings Cross-selling

5

Yes

No

Pre-renewal

Yes

6

Submission Outcomes

No

A systems view of relationship dissolution

Relationship Dissolution

Atelier 2 : Engagement et Désengagement dans la Relation

The Outcome Dimensions – The results of interactions between insurance brokers and their corporate clients are reflected at each level of the process leading either to continuity to the next stage or ending the relationship. New relationship vs. mature relationship - Before a formal trading relationship commences, there are two distinct stages where information gathering by both organisations is carried out. Combined, these two stages can last for up to one or two years, but can be as short as a few days. Once this information gathering phase has been completed, the outcome will be either (i) one of the organisations decides they do not wish to proceed or (ii) the relationship commences. Two types of relationship have been identified. The first applies to a new relationship during the information gathering phase and thereafter during the first year of the formal relationship. In this new relationship, there is a high level of activity and interaction between the two organisations; five stages have been identified. However, as the relationship progresses the number of stages reduces to only three in a twelve month cycle, and these are summarised in the mature or old relationship. Both relationship types i.e. new and mature have the ongoing potential for a further stage, the problem or troubled stage (Halinen, 1995).This stage may last for a very short period (one day) or could last several years. This stage may not necessarily mean the termination of the relationship, indeed, if handled correctly could enhance and strengthen the business-to-business relationship.

NEW RELATIONSHIP Stage One - Like other professional services, new clients are obtained principally by referrals or recommendations, usually obtaining details of the organisation from an existing client. This stage is also described as the pre-relationship phase (Halinen, 1994), pre-stage (Gummesson, 1979) or initial stage (Gronroos, 1980 & 1982). This stage can be very short ranging from several days but can last several years. Its main characteristics are the prospective client organisation is referred to as a ‘prospect’. Contact may be made by letter but mainly telephone. Discussions take place to establish a) their requirements b) details of existing covers/claims experience c) the timescales - current renewal date involved, and d) their reasons for looking for another service provider. If it is established early on that the requirements will be complex or large enough then face-to-face meetings will be organised. This stage can appear very informal. One broker commented: “You might think you are dealing with a company but even in the early stages it is still an individual dealing with an individual. The company thing is still in the background for either side, but it still people to people”. Management Issues - include, how have they obtained details of the broking organisation? Who has recommended them? Why did they terminate or about to terminate the relationship with their previous broker? If there has been a change of management personnel will there be any conflict of interests? What type of service are they looking for? As it was put to us by a broker: “Most of my stuff latterly came from client contact rather than me contacting them. That differed greatly from when I started the business when the relationships were initiated by me, there was very little contact from clients. As you get more and more established you get clients referred to you by existing client.” For commercial requirements further detail must be looked at. If the requirement is for new business balancing this with existing clients. Problems occur balancing technical and functional quality (Gronroos, 1982). The service quality issues include whether or not there is enough capacity within the broking organisation to deal with the prospect as a client, meeting existing standards? Is there enough expertise to deal with enquiry? Does the prospect have similar business ethics? How important is relationship quality satisfaction? - Before referring the services of an organisation, satisfaction in the service provider has usually been in existence otherwise referral would not have occurred. Trust – prospect’s initial trust appears in the ability of the broker to handle their account. Contacting Relationship Ending This “contacting” stage may be referred to as a testing period for the relationship (Dwyer et al.1987, p.20). Information exchange such as details of existing cover, time scale, referral name and so on,

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1ères Journées de Recherche en Marketing IRIS l IAE de Lyon, 4 et 5 avril 2005 leads to a mutual consideration which enhances the exploration of relationship. This exploration between a broker and their client is easily terminated. However, if the communication is effective at this stage it will lead to a prospecting stage where both parties move from information exchange to a negotiation role and discussing confidential information. Moreover, relationship ending may occur for technical or functional quality reasons. Technical may be a lack of competitiveness in the quotation, a failure to execute tasks correctly at the required time or, for functional quality reasons which vary from the “wrong chemistry” to poor contact procedures and a lack of follow-up in the initial process. Stage Two - This is known as the new business or marketing phase. Halinen (1994) describes it as the initial phase. To be completed effectively this stage must commence at least one-two months prior to renewal date (expiry of existing arrangements). This will allow an effective and efficient marketing exercise to be carried out. Main Characteristics - in this phase is the client is still referred to as a ‘prospect’. The initial programme design is discussed the factors for which include business type, size of organisation and risk profile. Included within this is financial information such as gross profit, turnover and wage-roll projections. Appropriate insurers are contacted including Lloyds for quotations. The results of this will determine which insurers are asked to quote. A timescale for tender presentation will be agreed and a cost-benefit analysis will be made if several carriers provide quotations. Amendments are made and omissions in the risk programme are discussed. Regular contact may be made to obtain any pertinent information. The overall activity level is quite intense. One broker commented: “... It becomes more personal as the relationship develops whether you’re dealing with the Finance Director or the Managing Director. It doesn’t make any difference it still comes down to a personal relationship”. Management Issues – A decision is made at this stage whether or not it is worthwhile to continue. Criteria include again a cost-benefit analysis, credit rating evaluation using such as Dun & Bradstreet and establishing the business philosophy (including attitude). One broker commented “We want the chemistry to be right. If it isn’t then they are not the kind of client we are looking for or can really help. Being open and honest is the essence of our business.” It may be that a letter is issued advising the outcome if declined. Characteristics of this phase include: (i) hardening insurance market conditions whereby the broker is no longer competing for business on price alone, (ii) a long term view is taken as stable relationships with insurers benefit all parties concerned i.e. client/broker/insurers, (iii) if clients are only price driven then problems with dealing only in price occur. The prospect may have quotations from several other sources and delays occur awaiting a decision on whether they will go ahead with the proposal. One broker highlighted the fact that: “It’s still not progressed you can still have reservations about the prospect. You have little niggles and doubts about the client and not even sure if you should be there. But you ‘re not comfortable and you don’t know why, and it can be exactly the same for the client. They can still not be comfortable with you at the tendering stage. You could go in with a tender significantly cheaper than your competitors and you can still not get the business”. Prospecting Relationship ending - is likely to arise as a result of more technical aspects of service quality particularly an uncompetitive quote but also failure to appraise all risks and to cater for the peculiarities of the client in question and their specific needs. Moreover, based on the exchanged and confidential information, the decision whether to continue is made. Stage Three describes the very early stages of the relationship, where formal trading has begun. This stage is known as the growth phase (Halinen, 1994) or the interaction stage (Yorke, 1990).This describes the first two to six months of the relationship between the insurance broker and its client. As one broker said: “there may be that either party doesn’t want to proceed or alternatively yes they do and you go to the tendering stage and at that time you’ve (broker) have collected all the information to allow you to put a tender together, and then you go out to the market to get quotations and at that point you may appoint an account handler”.. Main Characteristics - Instruction is given to go ahead with the proposal and any changes are agreed. Underwriters are instructed to cover at an agreed time and cost. Documentation is received from insurers - checked for any errors or omissions against any cover instructions given. The customer is now referred to as a client not a prospect and the organisation’s name is used in full (no abbreviations have yet developed). Documentation is posted or hand delivered to the client.

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A systems view of relationship dissolution

Atelier 2 : Engagement et Désengagement dans la Relation Management Issues – A professional is assigned to the client. Premium financing is agreed and this professional will be the account handler who will deal with the client on a day to day basis. Criteria for this post include experience and existing workload. The client is advised of (internal) contact(s) within the organisation. Documentation standards from insurer to insurer vary dramatically. If documentation is not checked then ‘errors and omissions’ may arise and technical failure can occur. Costs involved have to be considered especially when placing insurance cover but there is an opportunity to cross sell. Documentation must be handled effectively with the standards that have been set must now be maintained. Correct, timely advice must be given to the client and the broker must ensure adequate personnel are available when contact is made – in other words communication effectiveness. Tendering Relationship Ending – At this point, the transition from new relationship (Information gathering) to a mature or old relationship (formal relationship) starts and is characterised by initiation by the broker to act as an agent, quotations are provided and amended, insurers contacted. Account handler is nominated and known to the client. At this stage there is an intense regular interaction. Moreover, standards are checked and agreed upon. The broker will put further efforts into handling the relationship (account handler) and discourage dissolution at this stage. If any of the technical aspects of the process fail then this may cause termination of the relationship but it is the functional aspects of quality such as clarity in communications that also rise in importance. As one broker put it “to gain trust and respect and continue the relationship we put effort into not only price and cover but into clarity and frequency of communication between us, especially the account handler and the client organisation who may have several people involved. Account handlers in our organisation are reviewed annually on their capability in this area.” Stage Four This stage describes the final six months of the first year of the relationship. Known as the constant phase (Halinen, 1994) and the involvement phase (Yorke, 1990). Its Main Characteristics are that the client’s name soon becomes abbreviated. Everyone uses the same abbreviation. Claims and policy changes are notified to the broker by letter/ telephone/or fax. Contact can be frequent i.e. daily or very infrequent - more than six months depending on size and type of organisation and the value of the contract/client. As one broker put it to us: “You use nothing really other than their company name. Once you got past the first renewal stage (first twelve months of the relationship) your relationships starts to develop from that point. Until then its very formal relationship and as you get to know each other ‘from both sides of the fence’ it begins to get much more informal, and it’s at that point that the relationship begins to become slightly more informal”. Management Issues - If claims are much higher than anticipated risk management issues can be assessed. Again the relationship termination may be two-way not only from the client. A proactive approach works well i.e. contact client to ensure that all is well. Relationship ending - is more likely to occur as a result of functional quality issues. Poor communications, failure to disclose full risks by the client, excessive claims leading to a lack of trust can occur. A break up of the relationship is likely to occur well before any possible litigation but this is a possible outcome of substantial differences although this should be viewed as the exception rather than the norm. Stage Five This is known as the pre -renewal phase and it commences approximately two months prior to renewal (expiry of cover). None of the earlier models describe this phase. Its Main Characteristics is to obtain realistic financial and operational projections for next twelve months. Longer term business plan and projections may be provided by the client. Updated information is given to insurers to allow renewal terms to be obtained on the correct basis. A closeness develops in the relationship. Management Issues The renewal submission will be made to the client. Usually this is a face-to-face meeting if the client size or type justifies or requires this. However, SME clients may be dealt with by letter. This includes a review of premium financing options, an opportunity to cross sell and an opportunity to establish whether the client is satisfied with agreed, albeit informally, standards of service quality. If not the relationship may very quickly enter the troubled or termination phase. Relationship ending – frequently occurs here, sometimes mutually but often due to a failure in performance versus expectations by either party. If the relationship continues then it is a Return To Stage

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1ères Journées de Recherche en Marketing IRIS l IAE de Lyon, 4 et 5 avril 2005 Three, known as renewal but compares with the growth phase (Halinen, 1994) or integration phase (Yorke, 1990). Main Characteristics - The renewal process has taken place and the relationship continues again. Each stage is identical to that described above. Agreed documentation for the next twelve month period will be issued by the insurers. Management Issues are similar to the ones in stages three and four above. Ensure cover is in place as agreed and that documentation is correct. This paperwork should be issued in good time to the client. Relationship Ending – However, while this is an opportunity for growth and integration it can also lead to dissolution. This may occur from a more competitive quote, by the failure of the broker to effect business in the manner required and for many other possible reasons. As one broker pointed out: “In my experience, I knew in myself that I either didn’t provide the service or there had been a change in personnel/FD. You knew that your relationship wasn’t as strong and 9 times out of 10 you knew why you’d lost that piece of busines”.

MATURE OR OLD RELATIONSHIP In the mature relationship, where the relationship has progressed beyond its first year, the number of stages reduces to only two or three in a twelve month cycle, and these are summarised in the separate model of a mature relationship. The stages are almost identical to stages three, four and five which are discussed above.

Problem Claims or Complaints Stage Both relationship types i.e. new and mature have the ongoing potential for a further stage, the problem or troubled stage (Halinen, 1994). This stage may last for a very short period (one day) or could last for several years. This stage may not necessarily mean the termination of the relationship, indeed, if handled correctly could enhance and strengthen the B2B relationship The Main Characteristics are that the frequency of communication increases dramatically between the two organisations. One to one relationships can be damaged or indeed enhanced, depending on how effectively the claim or complaint is handled. Management Issues which can arise include if the claim/complaint is handled effectively this can enhance the relationship with the client. Conversely, if the claim/complaint is handled badly or gaps in the risk programme are evident the relationship can be badly harmed. This stage can be used by the broker as an opportunity to cross sell or provide cover for the client they were reluctant to effect previously. If the relationship is terminated it may not be as a result of breakdown. It could be caused by business failure or as a result of merger and acquisition activity. It may also lead to a referral as defined and discussed in stage one. Behavioural reasons are also part of relationship breakdown, as pointed out by one broker: " I did have a client who left me at this stage, but came back to me four or five months later because they didn’t get what the new broker had promised them and they realised that they were already getting the best service It is more likely that you will lose the client at the year end (renewal stage) when they go elsewhere“ In addition, it could be an opportunity for management to investigate any issues raised so they can be dealt with for the future.

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Atelier 2 : Engagement et Désengagement dans la Relation

CONCLUSION Broker-client relationships are cyclical in nature and style. This is principally because the products purchased run for a 12 month period and, therefore, require to be reviewed financially and operationally each year. Earlier buyer-seller models (Gummesson, 1979; Gronroos, 1980 and 1982; Edvinsson, 1985; Yorke, 1990 and Halinen, 1994) identified that different relationship types could be summarised in stage or phases. However none were cyclical in nature and could be not, therefore, be applied successfully to the broker-client relationship. Moreover, the dissolution models (Mitchell et al.1992; Perrien et al., 1994 and 1995; Bansal and Taylor, 1999; Giller and Matear, 2001; Halinen and Tahtinen, 2002), although they provide an insight into the subject matter do not explain the insurance broker situation. As a consequence, a conceptual model for insurance broker client dissolution is developed using the experiences of participants as grounding for this model. The application of this model by financial service organisations will allow them to obtain competitive advantage as well as avoiding the breakdown of their relationships with their corporate clients.

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