In the current economy, businesses need every edge they can get to stay competitive and protect themselves from risks.
And when covering those risks, if they make a mistake in insurance coverage, it usually doesn’t surface until after a disaster or liability occurs.
To ensure that doesn’t happen, businesses need to make sure they’re covered by a reputable broker who will go above and beyond to make sure those kinds of potentially catastrophic and costly gaps in coverage aren’t overlooked, says Rob Wilson, president of Employco Group, a division of The Wilson Companies.
“You need to be sure that your broker/representative has the technical knowledge to cost-effectively arrange your insurance program so it properly protects your assets and earning power,” says Wilson. “If your insurance program is deficient, you could be out of business at the time of a major loss.”
Smart Business spoke with Wilson about what business owners should expect from their brokers regarding service, offerings and risk management tools.
What is the broker’s role in helping businesses achieve a competitive edge through risk management?
The broker’s role is to design a comprehensive insurance program that properly insures the assets and earning power of the business owner on a cost-effective basis.
The broker must be sure that he or she has provided all insurable alternatives to the business owner so the owner can reach a conclusion of how best to protect the business.
What can happen if a business is not properly covered?
In the event of a major fire or other catastrophe, you need to have an insurance program that will enable you to be in the same position after the loss as you were before the loss.
If your insurance program fails to meet your needs, you could lose your business.
How do business owners know when it’s time to look for another broker?
It’s time to look for a new broker when you never see your broker and he or she does not schedule regular meetings.
Another reason for change is when the broker does not conduct annual reviews with you to update your file and incorporate any changes in your insurance program. For example, an increase or reduction in your inventory, a new building addition or a major swing in your payroll would require changes in your insurance program.
In addition, it’s time for a change if your broker is rarely available to answer your questions.
What should business owners expect brokers to bring to the table?
Your broker should provide a detailed summary of your exposures and a set of insurance specifications designed for your business. He or she will review with you a summary of your insurance coverage and a detailed premium summary, along with quotes from alternate insurance companies.
How much should you expect your broker to know about your business or industry?
A broker may know little about your business at the time of your first meeting. However, he or she must spend the time with you and other key employees to understand your company and learn as much as possible about your business.
Your broker needs to know the why, where and what about your operations and exposures and should take the time to learn these things in order to serve you more effectively.
How can business owners make sure their broker is accountable?
There are commitments a broker should make to confirm what the client should expect in the future.
The broker should be able to provide you with a time line of the services that he or she will provide, and when they should be provided. For example, you should know when you should expect delivery of your new and renewal policies or when you should receive your binder, coverage changes and answers to your technical questions.
How can business owners find a good broker?
You can narrow the field by asking your CPA, your attorney and business associates for names of reputable brokers. In the interview process with several brokers, you should determine if the broker has professional designations, such as the CPCU or AAI designations. These would indicate that the brokers take their business seriously.
Ask for a few references, as well as the names of the insurance companies that they represent. You may want to visit their offices and meet the employees that will be handling your day-to-day work, such as certificates of insurance and coverage changes.
You should also inquire about technical skills and the ability to properly service your account.
Rob Wilson is president of Employco Group Inc., a division of The Wilson Companies, which handles human resources outsourcing, staffing and insurance for 400 small and medium-sized Midwest companies. Reach him at (630) 286-7345 or email@example.com.