Relationships with insurance brokers are often developed through personal introductions and professional referrals. However, sometimes such relationships originate during a casual meeting at the golf course or fitness club. The broker appears to be trustworthy and congenial with a good general knowledge of insurance and the business world. But, after a while you find yourself having to repeat the same information about your business over and over. While the broker seemed knowledgeable in the beginning, you realize that this person actually has no in-depth knowledge about your industry and does not understand your business.
“If your insurance broker does not understand the inner workings of your business or industry, how can he or she truly protect your assets?” says Calvin L. Sistrunk, a principal at Garret/Mosier/Griffith/Sistrunk Insurance Services. “Businesses need every competitive edge possible in this tough economy, and having the right broker who truly understands your business can make a difference.”
Smart Business spoke with Sistrunk about the savings you can see from using a broker specializing in your industry, how to find the right broker and how to maintain a good working relationship with your broker.
What benefits are derived by using the right broker?
If your broker specializes in providing insurance and risk management services to companies within your industry, he or she should have preferred relationships with key insurance carriers. Such knowledge can translate into being able to provide the broadest form of coverage at the most competitive price. If your company can demonstrate that it has secured superior insurance protection for its customers or clients, you are often selected over the competition when subject to a competitive bid or RFP process.
When you hire a broker to protect your company and its assets, you are also counting on this person to protect your customers. To secure this level of protection, a broker and his or her staff must have firsthand knowledge on how to issue industry-specific certificates of insurance, provide critical counsel on difficult claims and, ultimately, provide safety management pertinent to your business. Such knowledge can also translate into direct cost savings; it’s not uncommon to achieve 10 to 20 percent overall savings when you’re working with the right broker. Brokers with professional risk management services will also demonstrate the cost savings they secure on top of the competitive rates the market affords.
A broker who specializes in your industry can also be a source of key referrals. For example, a broker specializing in the construction industry can refer potential subcontractors to his or her general contracting clients. In addition, a knowledgeable broker may know other professional service providers, such as accountants, lawyers, etc., that may provide your company with proven expertise to save you time and money. As GMGS principal Griff Griffith says, ‘Many insurance failures of the dot-com era proved that proper insurance protection is more than just purchasing a piece of paper online; it’s about leveraging knowledge into power and power into successful risk management.’
How do you know if you are using the wrong broker?
Typically, a company that experiences one uncovered claim and the expensive litigation associated with it learns this valuable lesson. The question is, can your business really afford to learn this lesson?
If your present broker makes excuses or demonstrates unexplained delays for getting your questions answered, this may also be a sign that you need to find a different broker. A broker who is a knowledgeable risk manager is not expected to have all the answers, but he or she is expected to know where to get the right answers and in a timely manner.
How do you find the right broker?
? Obtain reliable broker references from other executives within your industry. A company that has a knowledgeable (tried and tested) broker will provide strong references.
? Interview prospective brokers face to face and determine their personal experience and working knowledge of your industry. It is critical to determine what insurance companies they represent, and if they are the top insurance carriers in your industry.
? Brokers should be able to provide you with the following information:
1) Professional resumes of all key personnel and support staff who will handle your service. Look for information that demonstrates expertise and knowledge in your industry, such as education and past work experience. If they do not understand your industry, they can make costly mistakes.
2) Marketing materials that detail key insurance carriers and specific coverages pertinent to your industry.
3) An extensive client list, including several references you can personally contact to determine a broker’s expertise in your field. Any letters of appreciation from current clients are also a strong indication of a company’s satisfaction with a knowledgeable broker.
? Develop relationships with brokers who attend your industry-specific association meetings and that show a genuine interest in your industry.
How do you maintain a good relationship with a knowledgeable broker?
Take the time to meet personally and regularly with your broker. The use of an established service calendar can also pay great dividends for your company. Because broker compensation is comparable within the insurance industry, it is paramount that your company builds a long-term relationship with a knowledgeable broker whose risk management services not only protect your company’s assets but also provide you with the value-added service to grow your company successfully.
Calvin L. Sistrunk is a principal at Garrett/Mosier/Griffith/Sistrunk Insurance Services. Reach him at email@example.com or (949) 559-3373.