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Selecting a broker requires due diligence.  Careful consideration is required.  After all, your business and assets are in jeopardy.  The devil is in the details, and those details are in your insurance contracts.  As CEO’s and CFO’s you are responsible for the operations and performance of your company.  Are you also expected to be an insurance professional? That task is left to your insurance broker. Unfortunately, insurance brokers are not cut from the same cloth.  Their expertise and resources vary widely, and it’s not all “PREMIUM” driven.

 

Although there is much more to the decision making process when selecting a broker, it is important to consider the following in the order of importance.

 

• Coverage

• Premium…as it relates to coverage.

• Service and Resources

• You have to like the broker and or relationship manager and his team

 

Trust is not a factor early on… that must be earned

 

A:  ALL BROKERS ARE NOT THE SAME

 

1). TYPE OF ACCOUNTS THEY WRITE

 

2). MARKETING CAPABILITIES- Strong Dedicated marketing department makes the difference in the premiums you pay.

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-  Strong Relationship with underwriters contributing to premium relief

-  Technically strong coverage analysis… coverage comparisons between carriers

-  Matching carrier strengths to the customer needs…

      I.e. Loss control, carriers dominating in industry segments

-  Significant stable of A rated, reputable insurance carriers. 

-  High Level of Technical Insurance Experience 

-  Agency Internal Coverage Review Process is significant.  Check and re-check.  Avoidance of Error and Omission  and impact on clients.  “Why is there never enough time to do it write but always enough time to do it over?”

 

3). Broker/Agency Capabilities vary greatly.

 

• Volume of Written Premium

• Carrier representation

• Negotiation influence with carriers… personal experience from small agency to large broker

• Number of Offices

• Resources

  1. Dedicated claims advocates

  2. Dedicated resident engineers

  3. Loss control services (loss experience is not predicated on luck… it is a science… and insurance companies spend substantial dollars to reduce the exposure to loss).

 

       Managing client internal loss control and safety committees.

       Managing carrier loss control services for effectiveness.

       Provide consultative assessments to reduce loss.

       On site proactive involvement with client loss control personnel and implementation and communication to

       employees.

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B: TYPES OF BROKERS

                 

                  1). Large National Brokers- difference between and why this is important

                  2). Regional Brokers

                  3). Local Independent Agencies

                  4). Clusters-small independent agencies banded together for carrier representation. 

                       Clusters organizations are often not disclosed.

                       The appearance of carrier reputation is not an  indication of broker strength and competence.

 

 C: INSURANCE CONSULTANTS- upside and downside

                    What do consultants do?

                                    a). Write Specifications

                                    b). Solicit brokerages to participate in bidding process

                                    c). Charge fee for service

                 

D: Importance of Identifying Coverage Gaps within Contracts

                  1). Carriers’ coverage are not all the same.

                  2). Cautious review when moving to a new carrier.

                 

 

E: Selecting a Broker: The tough part… but worth its weight in gold.

 

                  Interview Process:

                                    1). Request For Proposal (RFP) vs Request for Qualification (RFQ)

                                    2). Brokers Capabilities

                                    3). Ethical and Moral business conduct

                                    4). Expertise in your business segment… “Professionalism will reveal itself.”

 

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Let us help you in the process of choosing your broker