When faced with myriad business insurance options, including complicated policies and ever-changing requirements, business owners know the value of retaining an advocate in the insurance industry who can act in their best interest. More and more, the most successful brokers are taking on the role of adviser when it comes to the health and wealth of their clients’ bottom line.
Though cost is always a concern, Ken Ewell, vice president of marketing with The Graham Company, points out that achieving the “best rate” is not the sole function of a broker. A low-cost policy with inadequate coverage could jeopardize a company’s future.
“Given the importance of a broker’s role in achieving the best outcome on your behalf, a broker must stay sharp from a technical standpoint on any changes in policy coverage forms as well as the status of the marketplace,” he says.
Smart Business asked Ewell to expand on what makes a broker a true advocate for business owners.
Beyond selling policies, what else should be required of a good insurance broker?
The best brokers help their clients to manage and mitigate risk. The most visible part of this process is related to insurance placement identifying the risks facing clients, designing an insurance program that will best protect them, negotiating terms and conditions with competing insurance companies and proposing a few options to their clients. This is the traditional part of the business insurance process with which most people are familiar.
The other thing that the best brokers do is to help their clients reduce the likelihood of claims and aggressively manage the claims that do occur. Reducing claims is done through loss prevention and safety services. For each client's particular industry and business processes, the best brokers will help figure out ways to make a product, a process, or a facility safer. They will also aggressively and proactively manage the claims that couldn’t be prevented.
The best way to reduce your long-term insurance cost is to reduce the cost of your insurance claims. The best brokers have figured this out and are willing to invest the time and resources necessary to make an impact in this area.
Discuss the qualities of a highly effective relationship manager in the Property Casualty industry.
Our business is interesting we essentially have two key relationships to manage. First and foremost, we have to understand and take care of the needs of our client the person or company buying the insurance policy. Secondly, we have to manage and maintain good relationships with our insurance company partners who provide the insurance products that our clients need. If an insurance broker neglects either relationship, it will cause problems.
The best brokers find a way to give their clients the best products and services available, while still being able to keep their insurance partners happy. It can be a challenge because multiple insurance companies often compete for the same client. The insurance company that doesn't win the business may get upset.
The best way to handle this is to clearly define the expectations at the outset. For example, we put together coverage specifications and service expectations that clearly define the insurance coverage and safety/claims services that must be provided in each competing insurance company proposal. At the end of the day, the insurance company that puts together a proposal that meets the specifications at a competitive price will usually win the business.
What are some things that a business owner should ask a potential new broker?
It’s usually a good idea to be cautious of the broker that walks in your front door and promises to save you money on your insurance program before he or she has done any serious analysis of your particular situation.
Assuming that you are at least relatively comfortable with the potential broker (e.g., they serve clients in your industry, etc.), we recommend starting with some analysis. Give the potential broker some information about your company, your current insurance policies and your loss history. Ask him or her to review the information and come back to you with recommendations for improvement. This will give you a chance to ‘test drive’ the new broker without making any commitments. When you see the results of the broker’s analysis, you'll have a better feeling of whether or not it makes sense to take the next step.
The next step should probably be to talk to a few of the broker’s clients who have similar risk management issues. You may even want to visit the broker’s offices and talk with some of the people who would be working on your account.
What is the bottom line that business owners should keep in mind when selecting an insurance broker?
Given the dual nature of a broker’s role representing the client in negotiations with the insurance company underwriter, it is of paramount importance that your broker is committed to advocating your interests above his or her own.
The challenge for you is that all brokers sound so much alike. However, it’s the broker that executes with expertise, reliability and integrity that develops a trusting relationship with a client.
KEN EWELL is vice president of marketing with The Graham Company. Reach him at firstname.lastname@example.org or (215) 701-5281.