There are 5 very important steps, we feel, in partnering with the right broker or risk manager.
- Why does your broker do what they do? Do you understand why they are in this business?
- Demand re-investment of commission dollars back into the enterprise and understand exactly how your broker provides this re-investment.
- Ensure transparency through out the process. For example, do you know how much your broker gets paid on your insurance placements?
- Avoid being aggressively shopped around the marketplace each year. This is not looked at favorably in the marketplace. Carriers look for long term partnerships with their insured’s. This doesn’t exclude your business. Think about it.
- Allow enough time in the process to avoid rushed decision making. Renewal terms a week before is not enough time.
Financial executives typically have responsibility for managing a company’s business insurance. In many instances, the task is overly complicated because the process is not transparent and comparing quotes is difficult due to the lack of information available or a lack of understanding insurance, it’s process, or how to achieve great results. By understanding the quoting process better, finance managers can make the best possible decision regarding a budget item that could have a material impact on the bottom line.
It’s important for companies to understand how brokers will position your business with an insurance carrier at the start of the quoting process. An insurer will provide a quote for your business to only one broker, not multiple brokers. This process of underwriting is time consuming for carriers. Because so many companies are under cost pressure, carriers have been inundated with requests for quotes. Like others who do business development, carriers need to focus on the business they will be successful in partnering on, due to the intensive time commitment each account takes to underwrite properly. Multiple brokers are an indicator the business is being aggressively shopped and there is not a great opportunity to win the business.
We understand that price is important. The request for a competitive bid, by multiple brokers, signals that price, more than the value of a proper long term relationship, may be of more importance to the client. In our opinion, this is not the best choice. We look to find balance between competitive pricing and a long term relationship. Carriers are motivated by making smart underwriting decisions that prove to be profitable over the long term. They want a partnership. We aim to align our client partners with our carrier partners correctly and we understand the marketplace better than most.
With ample time, a better decision is likely, so it’s critical to have adequate lead-time and to avoid making rushed decisions because of an upcoming renewal. When we represent our clients, we maximize our leverage with carriers by aligning correctly, negotiating early, and placing a high priority on those partners in winning the business by giving our clients more clout in carrier selection and interviews to achieve their expectations. The bottom line is our relationships are built on trust and continue to be. Our clients determine who they trust, and we consider ourselves their trusted partners in the design and negotiation of their insurance program, the handling of their complex claim situations, and proactively addressing their day to day expectations of the insurance partnership.
Contact us today to find out more about what our client’s experience with.
By: Tony McIntosh, CEO, Mission West Insurance Solutions