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:
- Represents the insurance company
- Sells insurance products for a commission
- Helps buyer select insurance coverage
- Binds coverage
- 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.
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.
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.
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.
D&O Insurance Benchmarking
Directors & Officers Insurance Benchmarking
Sure, anyone can tout experience, but do they actually keep their pulse on the market? Our word of advice is to require several areas of proof. Look for whitepapers, case studies, benchmarking tools, webinars or videos, testimonials, etc. And don’t be afraid to ask for client references. If they have industry expertise, you’re going to pick up on that quickly.
Questions to Ask Potential Broker
Aside from honestly getting to know a potential commercial insurance broker, consider asking them the following questions, as well:
- How do your commissions and fees work?
- What are your resources?
- What kind of technology do you use?
- Do you offer any discounts or breakpoints?
- What is the scope of your services?
- What is your coverage capacity?
- Are you certified and licensed in my state?
The Benefits of Using a Broker
Complicated insurance risks require sophisticated and innovative solutions. No company leader should navigate all the vulnerabilities solo. A commercial insurance broker takes that weight off your shoulders. They do the dirty work of identifying potential losses and areas of exposure.
Additionally, they learn about your business to place policies where you need them most, whether out of requirement or to cover a risk. Since they don’t work for one insurer, they can offer impartial advice without you constantly having to second-guess their motive. They’re invested in you, and they look out for your business.
Plus, this conversation is ongoing. It’s not a once-per-year discussion and then “so long until the next renewal!” Many commercial brokers provide continuing education and support in benchmarking tools, market analyses, and more. Lastly, commercial insurance brokers assist with claims, and adjudication is something very few of us genuinely want to experience. With a broker on your side, you don’t have to go it alone.
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.