Has Your Insurance Broker Got You Covered?

An insurance broker is a risk management professional who should be able to save you money and be able to clearly explain what kind of insurance your business needs.

That’s especially true today. Insurance is a cyclical industry and very often it goes through a three- to seven-year “hard” market, where rates are relatively high and few coverage options are available, leading to a “soft,” or buyer’s, market. Right now, the industry is experiencing a soft market.

What this means for small business owners is that there is an opportunity to reevaluate the program you have in place and assess whether or not you’re getting the best value for your dollar. You likely can get expanded coverage for the same price, if not a lower price, than you’re currently paying.

When considering your insurance broker’s performance, ask yourself the following questions:

Does the broker work with multiple insurance carriers?

The more players in the field, the more options for you. A broker’s clout with these carriers typically impacts the rate they will negotiate for you. Having many industry contacts will enable them to see trends overall and be able to articulate differences between policies.

Be sure the quotes you’re offered are from top-rated, admitted carriers. (Carriers are “admitted” by the insurance department of each state, making them subject to the state’s rules and regulations.)

You may be presented with a package that shows significant cost savings, but if the insurance company has a poor evaluation from the rating organization A. M. Best, you will want to think carefully about whether this is the right package for your business.

How well does the broker know my industry?

The best way to determine this is to ask whether he or she has other clients with businesses similar to yours. For example, a broker who is selling to a law firm should be able to advise the firm about Employment Practices Liability Insurance (EPLI), which covers situations such as failure to make partner, and partner vs. partner lawsuits.

Your broker should also be able to speak knowledgeably on the kind of cyber-security insurance your business needs, and on laws regarding a company’s liability for security breaches in your state. (Forty-six states, including New York, New Jersey, and Connecticut, have implemented applicable laws.) It’s important that your carrier, as well as your broker, have extensive experience in your industry.

What type of value-added services can the broker provide me aside from a quote at the end of each renewal?

Some important value-added services to look for are: claims management; loss control and risk management; and vendor contract reviews as they relate to insurance requirements.

Will the broker be available to guide me through any questions or concerns, or help me reevaluate my risk exposure and coverage needs?

If you are not getting a timely and helpful response, you should seek another firm.

Have I done my homework?

Do some research before selecting a broker. Check out his or her LinkedIn profile. Not only should you research the individual, but also the organization he or she represents. Leading trade publications and trade associations in your industry may be able to provide lists of top brokers who work with businesses similar to yours.