Selecting A Broker
Some Considerations in Selecting an Insurance Broker
Do you value the professional relationship you have with your broker? Do you rely on him or her in insurance and risk management matters because he or she has demonstrated professional skill and commitment, consistently, in ways that are important to your particular organization? Do you have a good rapport? If so, you probably are with the right broker, and don’t need to read further. If not, you might be like many insurance buyers who feel they need to have an occasional competition among brokers, just to test whether a change would be beneficial. The rest of this section is intended to help you manage that process.
If you have had competitions in the past, perhaps you have invited the incumbent and a few others to participate. Because property and casualty insurance companies will recognize only one “broker of record” for your organization, you had to specify which companies each broker was allowed to approach on your behalf. As well-intentioned as this kind of “competition” is, it often produces an unfortunate result — the insurance proposal you like the most was not presented by the broker you like the most.
There is a way to avoid this result, and still have the competition.
Several months before your insurance program is up for renewal, meet with any brokers with whom you would consider working. Meet the people you would be working with on a day-to-day basis. Interview them about their service capabilities, the companies they represent, and any other factors that will influence your eventual choice of a representative. Take the time to verify what they tell you. Ask how they would be compensated (commission, fees, or a combination), and judge whether the compensation is fair, for the actual services you would receive.
If you are comparing independent brokers, you probably will find that any of the ones you are considering have access to virtually the same insurance companies. The crucial comparison will be in the people, the service capability, and the commitment you find among the brokers.
Choose the broker with whom you feel most comfortable, who also has the service capabilities you need, and will be fairly compensated. Your choice might be the incumbent; it might be someone new. At that point, the competition is over. If the chosen broker is someone other than the incumbent, you simply issue “broker of record” letters, instructing your insurance companies to recognize the new broker as your representative. Before your renewal, your chosen broker will approach all the insurance companies he or she believes would be viable for you (including your incumbent companies), and bring you the best proposal.
Now you have the ideal combination of broker and insurance company.
Sound radical? Is it any more radical than the way you choose your doctor, your attorney, or your auditor? We believe you should choose your insurance and risk management representative just as you do any of these other professionals. However, if you feel that you cannot take the step of releasing your current broker without obtaining a renewal proposal from him or her, that is all right. At least you will have narrowed the competition to two brokers, each of whom can approach half the insurance market for you.
If you need a starting point for your comparison of brokers, we commend to your attention the CIMA Profile and Philosophy, and the description of our services you will find throughout our site.