4 Tips for Choosing an Insurance Brokerage
Most business owners are aware of how important it is to carry commercial insurance for their company. Still, the process of selecting an insurance brokerage can be complicated and confusing. Here are a few tips on how to navigate this process.
“Wow, look how interesting these legal requirements for commercial insurance are!” -said, No One Ever
While getting insurance coverage may seem like a good idea due to the protection it can provide to a company and its employees, there’s another even more important reason to get coverage. Depending on the type of business, having commercial insurance might be legally required.
Before starting to search for an insurance brokerage, companies should find out what the legal requirements for their business are at the state and federal level. Then, armed with that information, the business can move forward and find a broker that will meet its specific needs.
What in the World is a RFP?
A common approach many companies take when beginning to look for an insurance broker is to send out a Request for Proposal to more than one potential broker. The RFP typically lays out the broker’s credentials as well as an assessment of the company’s risk profile. When asking for a RFP, make sure to set specific deadlines for the broker to meet.
Also keep in mind that while the RFP is a good start, it can be easy for a broker to paint a great pitch for themselves behind those shiny graphics and potentially hundreds of pages of research. In order to make sure the broker is the right choice, some additional steps are needed.
Back Up Their Story with a Background Check
Companies searching for an insurance broker should use some of the same methods they already use when hiring any other employee for the business. All insurance brokers have to register with their state. This fact can help a company find out information about the broker that might not be otherwise readily available.
For example, this website, knows if a broker has had any investigations conducted against them as well as a list of other companies that the broker already represents.
Get the Facts Straight with an Interview
Dramatization: Insurance brokers do not look this happy when wet.
While it is becoming increasingly common to simply put out a Request for Proposal (RFP) to multiple insurance brokers, a better idea when it comes time to actually make a selection is to bring the potential broker into the office, just like any other job interview.
Because the fine print on the RFP can often read like pig Latin, an in-person or over-the-phone interview will allow the business owner to clarify exactly what he or she is getting when hiring the broker. Here are some helpful questions to ask according to risk management and employee benefits firm Barney & Barney:
- What experience do you have with companies with similar risk profiles?
- What makes your firm different than the competition?
- How can we improve our risk management program?
If there are multiple brokers to interview, try to schedule them all within a few days of each other to keep the information fresh in your mind.
Commercial insurance is a good idea for any business, and in some cases, it may be a legal necessity. When starting the search for an insurance broker, cast a wide net and make a Request for Proposal to get the fine print on what the broker can do for you. When narrowing the applicants down, don’t forget to conduct a background check and job interview, just like any other potential hire.