The search for a quality insurance broker should be conducted with great
diligence. Policies can be complex and the failure to have the proper coverage
in place can have devastating results.
Every company is unique, so insurance
needs can vary significantly from business
to business. The ideal broker should take
the time to analyze your operations and
then coordinate the appropriate coverage.
Most importantly, he or she should be
someone with whom you will be comfortable establishing a long-term relationship.
“Your insurance broker should be a trusted adviser, much like your CPA or attorney,” points out Scott Firestone, area president of Arthur J. Gallagher & Co.
Smart Business spoke with Firestone
about how to go about finding a good
insurance broker, the importance of forging a relationship with your broker and
why a company’s size should not factor
into the level of service that is provided.
What types of services does a quality insurance broker bring to the table?
A company should look to its insurance
broker to provide all its risk management
needs. This includes coverage placement;
however, it also includes advice on how to
mitigate costs through risk management
and nontraditional risk transfer techniques.
Your insurance broker should have a
wealth of in-house services and experts
available to all clients. Loss control, claims,
actuarial and manageable workloads for
account managers are key services. Many
brokers rely on insurance companies to
provide some of these basic services. In
most cases, your broker or agent is paid
through commission via the insurance
companies. The client pays the same
amount regardless of the sophistication or
bench strength of the broker. Why would a
business not choose the broker with the
appropriate services to manage risk and
properly service the account? Especially
when there is no additional cost to the
client.
How should a business go about finding a
good broker?
The most effective way to find a good
broker is to ask for a referral through a
trade organization or competitor. There are
many, many insurance agents and brokers;
however, you want to do business with a
firm that knows a lot about what you do for
a living and the risk exposures you face. It
is also necessary to ask a broker for references to make sure that promises have
been kept and that his or her clients have
had a good experience with the firm.
Why is it important for a company to forge a
relationship with its broker?
Insurance policies are complicated and
you need to do business with someone
who can ask the right questions and access
the proper coverage. Improper insurance
coverage can put you out of business in the
event of a loss. A business needs a broker
who has the ability to place coverage that
will cover the assets and liabilities for the
business, contractual obligations, business
planning and personal protection. Only a sophisticated broker with knowledge of
your business can make sure you are properly protected.
Does a company’s size factor into the level of
service that is provided?
The size of a company should not make a
difference in the level of service provided.
A ‘small’ company has the ability to have a
loss as large as any Fortune 500 firm. The
key is to work with a broker who has the
intellectual capital to know what the firm
needs, who has access to the markets and
who has the in-house resources to provide
the safety and loss-control necessary. Size
is relative to premium only. Every risk has
the ability and probability to have a claim.
A good insurance broker will ensure that
the proper coverage is in place when that
claim occurs.
What steps can a business take to minimize
risks and, in turn, qualify for lower premiums?
This is a tough question to answer without knowing the company’s specific risk
management needs. The fact is that every
company is different, and the premium
isn’t the only cost involved in a quality
insurance program. Every company can
manage its risk in different ways to lower
its overall cost of risk. It takes a quality
insurance broker to review all of your
options with you so that your insurance
budget goes as far as it can to protect your
company.
SCOTT FIRESTONE is area president of Arthur J. Gallagher &
Co. Reach him at (818) 539-2300 or [email protected].
