Many business owners use an insurance broker for buying commercial insurance. While business owners may feel secure knowing that their business is covered, the litmus test of a policy’s adequacy is when a claim is filed.
But how does a business owner tell one insurance broker’s services from the next? They may end up basing their decisions exclusively on price or an attractive package deal.
“Insurance is often treated like a commodity, but selecting an insurance broker should be done with the same care as selecting an accountant, banker or attorney,” says Rob Kempa, a commercial insurance broker with Westland Insurance Brokers with offices in Irvine, San Diego and Temecula.
Smart Business spoke with Kempa about tips on how a business owner can determine if an insurance broker is good fit for his or her business.
What are the hallmarks of a good insurance broker?
At the very least, an insurance broker should assess your risks, tailor an insurance program that will protect those risks and provide recommendations to improve the insurance program to transfer the risk via risk management processes that include buying an insurance policy.
Insurance brokers that go above and beyond these basics are a true asset to a business owner.
What are some of the things that make an insurance broker stand out from the pack?
A good insurance broker will help business owners consider risks that they would not normally consider and help them foresee problems that could jeopardize the company in the future.
Clients ought to expect that an insurance broker behave like an attorney, a banker or another trusted adviser rather than simply a salesperson.
A good insurance broker is often very involved in advising clients on the ever-changing landscape of insurance trends, policy and coverage changes. A good broker should also make sure that clients are in compliance with ever-changing laws and regulations, so that if a business is inspected everything will be in order. The broker can achieve this by hosting seminars and workshops within the client’s company about pressing issues, such as compliance with OSHA and reviewing a company’s safety programs.
A good insurance broker can also communicate with clients through e-mail or a newsletter about insurance issues that can affect businesses.
What are some red flags that a business owner should be aware of when selecting an insurance broker?
Beware of insurance brokers that emphasize only price and savings. While you may save money in the short-term, the premium savings can be eradicated if there is ever a claim not covered due to a gap in coverage.
Also, be wary of brokers who do not have experience insuring companies that are similar to yours. Brokers or the insurance companies they represent need to understand the industry that you are in if they are to completely understand all the risks that need to be covered.
Do not take a cookie-cutter proposal. Make sure that the broker has analyzed your business and is giving you custom-designed services.
Lastly, make sure that the insurance brokerage firm you select has adequate resources to properly manage your account. Make sure the broker has a highly qualified staff to support your servicing needs. The broker should represent many high-quality carriers that can support your company in the ever-changing marketplace.
What are some tips when seeking a good insurance broker?
Get recommendations from your other trusted advisers, your business associates, friends or your chamber of commerce.
Interview at least two to three prospective brokers, similar to the way you would interview a prospective employee. Research the history of the broker.
Make sure the insurance broker has experience insuring a company in your industry. How long has he or she been a broker?
Make sure that the broker is not acting as just a salesperson, but takes on the responsibility of becoming your risk manager and insurance adviser.
Do not make your decision based on price alone, but ask the broker to provide a line-by-line assessment of the coverage so that you can easily review and compare with other brokers.
Ask for references and a list of clients, and call them.
Make sure the carriers the broker is presenting are A-rated AM Best carriers. This can easily be checked by visiting www.ambest.com.
Make sure the broker can provide full brokerage services not only property and casualty insurance but also employee benefit, personal lines and safety management. By selecting a full-service broker, this will give you the convenience of working with one firm rather than many.
ROB KEMPA is a commercial insurance broker with Westland Insurance Brokers (www.westlandib.com), a full-service commercial and group insurance company with offices in Irvine, San Diego and Temecula. Reach Kempa at firstname.lastname@example.org or (619) 584-6400, x3216.