What should a business look for in an insurance brokerage firm?
There are major differences from one brokerage firm to another. First and foremost, the firm’s financial condition should be an important consideration. A thriving, well-managed firm will continue to invest in its people and other resources, which will ultimately drive value to its clients. Conversely, some brokers have undergone significant restructurings, including staff reductions, which have led to disruptions in client service.
You should ask the broker about its commitment to revenue transparency and have it provide a copy of its transparency policy. Does the brokerage firm have industry and product practice groups? Recognize that having one or two individuals in a single office does not constitute an industry practice.
As businesses continue to expand globally, ask about the broker’s international capabilities. An owned network of offices means the broker has made the commitment to serving the global needs of its clients. If the firm is working through an affiliated network, the broker is unable to effectively manage the quality of service being provided.
It’s also a good idea to request client references from similar-sized organizations. In doing so, ask what value the insurance brokerage firm has driven into their organizations. Ask whether their benchmarking capabilities include cost issues, limits, retention levels, etc.
A strong working relationship with underwriters is also important. What amount of premium does the firm funnel into the insurance marketplace? A relatively low volume could impact their ability to negotiate the most cost-effective insurance program.
Other questions to ask include, ‘What is the firm’s process for keeping clients up to date on insurer solvency issues? What has the firm’s experience been in reducing total cost of risk for its clients? What risk management information systems does it offer?’
How can you build a strong relationship with your insurance broker?
You should consider your insurance broker a trusted business adviser. To be effective, they should understand your firm’s short- and long-term goals. They should also have some form of access to the most senior levels of your firm. A good opportunity for this is during the annual stewardship meeting.
Having an open and positive relationship with your insurance broker will create value and, ultimately, deliver great results for you both today and in the future.
Dave Schaake is resident sales director of Aon Risk Services Central Inc. Reach him at (314) 854-0821 or [email protected].
