The Role of a Good Commercial Insurance Broker

Commercial insurance brokers are not simply salespeople. This conflation has resulted in a common misconception among consumers – that it is in their best interest to work with various insurance brokers at once because doing so will increase the probability of receiving a cheaper quote. While compensation may differ among brokers, shopping for insurance with several brokers at the same time is in fact disadvantageous and can result in fewer competitive insurance options for your business.  
 
To dispel the notion of “broker shopping” benefiting consumers, it’s worth reviewing the role of an insurance broker in the context of your business and looking closely at the relationship that exists between a business, its broker, and the insurance marketplace.  
 
What is the role of a commercial insurance broker? 
While the unique nature of your business will dictate what you need from your broker, there is one requirement that remains consistent, no matter the size or complexity of your business: client care.  
 
A broker’s role is to serve your best interests – they are meant to assess your risks, goals, and coverage requirements and to then work with insurance companies to create or obtain the policies you need. The client-broker relationship is an important one, as a deep understanding of your business will result in better representation to insurance markets and a better alignment with your goals and service needs. 
 
When it comes to claims, a broker is not a neutral intermediary between you and an insurance company. Rather, they are your advocate, working to ensure a speedy and fair settlement. A great broker will utilize relationships with underwriters to facilitate a smooth process — connectivity between clients, underwriters, and brokers can result in a more palatable resolution when claims occur.    
 
What is the relationship between brokers and insurance companies?  
Access to insurance companies is not universal between insurance brokerages. Your broker must have a formal partnership with an insurance company in order to approach them with a submission detailing your business and your risk.  

Consequently, relationships in the world of commercial insurance are extremely important. It is in your interest to work with a broker that has partnerships with a variety of insurance companies so that you can receive the most appropriate and competitive offerings. Moreover, it’s important for your broker to have meaningful relationships with underwriters, as they are the ones who will ultimately determine your offering, including coverage, deductible, and premium. The nature of the relationship between your broker and underwriters has direct implications for the insurance coverage that you will be offered.  
 
How does “broker shopping” hurt your insurance procurement outcomes?  
It is not advisable to have more than one broker approach an insurance company about your business. For the insurer, having multiple submissions can reduce the sense of professionalism surrounding your application. In addition to potentially damaging the strength of your company’s position, an insurer is not likely to consider a second submission, given the investment of their time and consideration into the first.  

Furthermore, once a broker has received a quote for your risk from an insurance company, that insurance company is then bound in an exclusive agreement with that broker in relation to that placement. Once the quote is received, no other broker will be able to approach that insurance company for the risk that you are looking to insure, even if they have a partnership.  
 
Consequently, you could inadvertently lock yourself into a more expensive quote with a particular insurer, when one of the brokers you are considering may have had a better relationship with the underwriter and could have procured a better quote for your risk.  
 
Simply, by shopping for insurance with multiple brokers, you can adversely complicate the quoting process by secluding yourself with a worse offer than what might’ve otherwise been available.  
 
The Importance of Working with the Right Broker  
Evidently, working with the right insurance broker from the outset of your search for commercial insurance is crucial. But how do you know which broker is right for you?  

Consider your insurance broker to be your partner and advisor in risk management – someone who has a deep understanding of the industry that you operate in and who has relationships in the marketplace to get you the best insurance coverage possible. Ask them about their market philosophy, their experience, and how they plan to market your risk with insurers and their underwriters.  
 
If you’re looking for a commercial insurance broker that understands the importance of relationships, both with you and with the insurance marketplace, let’s discuss your needs. Email findoutmore@equaspecialty.com today.