What’s the Role of a Commercial Insurance Broker?

Working with a reliable commercial insurance broker is a top priority, whether you’re a one-person business or have hundreds of employees on the payroll. A well-fit partnership can help protect your business, customizing coverage to your needs and budget. While this position might seem obvious, the job of a commercial insurance broker is more nuanced than that. Let’s talk about the role of a commercial insurance broker, how they shop around for insurance, and what to look for in a potential partnership.  

Before we delve deeper into the role of a commercial insurance broker, it’s essential to understand what is a BOR, which stands for Broker of Record. A Broker of Record is a designation given to a specific insurance broker who is authorized to represent and act on behalf of an insured client in insurance-related matters. The BOR has the authority to access and handle the insurance policies of the client and may also have the power to negotiate and place insurance coverage with various insurers. This designation is crucial as it determines which broker receives the commissions and fees associated with the insurance policies.

Now, let’s get back to discussing the role of a commercial insurance broker and how they can assist you in finding the best insurance coverage for your business needs.

Understanding a Broker vs. Agent 

To begin, what’s the difference between a commercial broker and an agent? Many individuals use these terms interchangeably; however, each one has distinct responsibilities worth reviewing. The following are critical duties that set agents and brokers apart:

Agent: 

• Represents the insurance company
• Sells insurance products for a commission
• Helps buyer select insurance coverage
• Binds coverage 

Broker:

• Represents the buyer
• Charges a fee and commissions for services
• Examines several terms and conditions options for best fit and price for the buyer
• Depends on an insurer to bind coverage

What a Commercial Insurance Broker Does 

As an intermediary between you (the buyer) and the insurer, a commercial insurance broker works to make the experience as seamless as possible — or, at least, that’s what we expect! 

Let’s be candid; insurance is often one of the most boring subjects known to humankind. Although we find this industry challenging and intriguing, most people don’t. Instead, the terminology can seem confusing, and matching risks with coverages is anything but straightforward. 

Customized Support

A commercial insurance broker helps break through the noise, calming the confusing whirlwind of information and giving you direct answers. Part of what makes a commercial broker’s job so unique is that they get to know you and your business. 

Our team conjured up a handful of general questions a commercial insurance broker might ask you during your first encounter, including:

• Would you tell me about your business?
• How long have you been operational?
• What goals do you have for your business?
• Have you faced specific obstacles in the past?
• What worries you most about your business/industry?
• What are you hoping to accomplish by working with me?

If you work with a broker savvy to your industry, they’ll help identify specific risks and catch you up to the cadence of any noteworthy market trends. Naturally, your relationship with your commercial insurance broker will become more nuanced as your needs unfold. 

For example, the banter might become more personalized, and your broker might even learn your dog’s name or your favorite food. Undoubtedly, the camaraderie will deepen as you align professional goals with one another. 

Aside from being invested in your overall experience, the most valuable part of working with a commercial broker is that they do the heavy lifting for you — they shop for insurance.

Personalized Shopping

Commercial insurance brokers understand the nitty-gritty details of insurance policies, such as exclusions and limits. As a result, they are the front person when shopping for the best insurance policy for you. 

Many individuals assume they have to work with several brokers to land the best deal. But this strategy will hurt you more than help you. We can sum up the reason in two words: market blocking. 

Market blocking is an archaic tradition allowing an insurance proposal to only a single broker (or agent). This act prevents all other brokers or agents from accessing that particular market. If you’re engaged with more than one broker, you’re tying their hands. And you will not likely get the best deal available. 

After going through this situation dozens (perhaps hundreds) of times, we’d like you to consider a more sophisticated approach to shopping for your insurance. Mainly, it boils down to shopping for a commercial insurance broker.  

How to Shop for a Broker 

As imagined, working with an experienced broker has plenty of benefits. The “been there, done that” approach is invaluable for multiple reasons. Plus, a commercial broker is invested in your business, not just a salesperson or a professional passer-by, per se.

Industry Expertise

Shopping for a commercial broker calibrated to your industry or business is tricky. To begin the process, we urge you to focus on their experience. Do they have any research or studies available (like the D&O insurance benchmarking resource below)? This information is an excellent indication of their market expertise.