Insurance Broker RFP Guide: Questions To Ask & Mistakes to Avoid
Companies typically use the request for proposal (RFP) to launch new projects, including hiring a new insurance broker. However, it’s tough to know when you’ve outgrown your current broker, and this particular process can get messy quickly. This post brings clarity to the RFP process while sharing insider tips to avoid common pitfalls. Let’s dive in.
Making sense of the RFP process means understanding RFPs first. A request for proposal is a business document that describes a specific project’s requirements and needs. For example, when a company is ready to leave its current broker and team with a new one, it will embark on an RFP process with potential brokers. Here’s how this endeavor typically unfolds:
It’s not uncommon for companies to use the RFP process merely to gauge the market. Doing so helps determine whether they are getting enough bang for their buck and having adequate coverage. However, many times, businesses use RFPs to shop around for a new broker. But how do you know when it’s time to leave your current broker? Here are a few ideas to consider:
When you decide that a new broker is what your company genuinely needs, the RFP process begins. Here are a handful of helpful questions to ask during this process:
As mentioned, an excellent broker knows the ins and outs of your industry. In short, they honestly “get” you. So, ask potential brokers to place policies according to the unique risks they’ve identified for your company. This strategy will call upon any insider knowledge they possess while giving you a clear view of their expertise and communication style — plus, it’s free advice.
Some brokers will rattle off standard commercial policies, but you need a more tailored approach. When a potential broker customizes their policy recommendations, how well do they suit your business? How did they decide on those particular policies (i.e., team effort)? This question will pinpoint whether the broker can fulfill their duties and customize a robust risk management plan for your company.
In an ideal situation, a broker is an extension of your business, offering you sound advice and coverage loopholes. Sometimes, brokers offer extra services, such as claims advocacy, databases, and hard-to-find industry information. These services are usually charged as a package deal or onesie-twosie. Ask directly what services a potential broker offers and how much it will cost you.
Learning about a brokerage firm’s inner workings and team dynamics can inform you greatly. Do team members work together to produce cohesive and stable services, or do they offer more of a scattershot approach? Think about this: in the middle of a costly claim, these are the folks that you want to be working in stride with each other, not against one another. Take the time to learn about their culture.
Naturally, the price tag question is on everyone’s mind. It’s a no-brainer. However, consider how the potential broker presents the ultimate price to you. Do they break down the costs straightforwardly, or are you left trying to read between the lines? Does the potential broker work on commission or fee? Demand clarity, listen for consistency, and don’t settle for less than a cohesive price breakdown.
RFPs are often complicated, messy, and exhausting for management teams — but they don’t have to be. Avoid making these five common mistakes along the way.
Spreadsheets work well when comparing straightforward data, such as numbers or figures. They’d likely work great for RFPs, except that this process is highly nuanced. It’s not as effortless as comparing apples to apples.
Unfortunately, many companies condense valuable information into tiny boxes on a spreadsheet and miss crucial data. Spreadsheets leave little room for expanded answers. Remember that you’re not buying a product; you’re teaming with an expert. Consider using another method to compare your RFP responses so you can review all the information.
Shopping for a new broker is more than throwing mud at the wall to see what sticks. Instead, do your pre-vetting work, and find brokers already aligned with your company’s core values. Study up on brokers serving your industry to determine if they’d be a good fit. You don’t want to send dozens of inquiry emails to unfamiliar brokers. (The thought of screening those responses is probably enough to nix that idea!).
Insurance ecosystems are expanding drastically. The roles are changing, leaving your network larger than it was a year or more ago. Don’t be shy about tapping into these resources. Ask your circle of professionals if they’ve ever worked directly with a potential broker. What was their experience? Ask for referrals, and reach out to your professional network for advice. This first-hand experience can be invaluable.
Sure, the cost is going to weigh heavily on your final decision. Insurance is a significant expense, after all. Plus, price tags are easy variables to compare. Keep in mind that there should be more to your choice than mere money. The lowest bid might not be the best fit for your company. Conversely, the highest price might not be what you genuinely need, either. Leave room for other crucial factors to influence your final decision.
If you plan on switching brokers at the end of the RFP process, be sure to leave ample time for the changeover. Most companies launch the RFP process up to six months before renewal time. Typically, the RFP process takes roughly three months, leaving plenty of time to switch brokers if necessary. Before you begin this endeavor, consider all the individual schedules you’ll need to coordinate and plan accordingly.
Distributing your RFPs is indeed part of the battle, but the last leg of this process is reviewing the submitted proposals. Here are helpful guidelines to get you through this task successfully.
Understanding the details of what coverage your company needs can be a confusing process. Founder Shield specializes in knowing the risks your industry faces to make sure you have adequate protection. Feel free to reach out to us, and we’ll walk you through the process of finding the right policy for you.
Want to know more about business insurance? Talk to us! Please contact us at email@example.com or create an account here to get started on a quote.
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