Having the right business insurance broker can save you money while protecting your company and employees. Learn what a commercial insurance broker is, how they are paid, how to choose the best one for your business, and more.
A business insurance broker helps companies evaluate and select insurance policies. Unlike insurance agents who represent an insurance company, brokers present a variety of insurance options to their clients. They help employers understand their choices and decide on policies that best fit their needs. While some commercial insurance brokers work independently, most work for a brokerage firm.
Business insurance brokers generally fall into two distinct categories with little overlap, which is why most companies have not one but two or more brokers. It works out this way because you can’t purchase all of the commercial insurance products you need from just one person.
Generally, brokers specialize in one of the following areas:
The first type of business insurance brokers are those who specialize in insurance products relating to health and medicine. These brokers offer medical benefits and should be your go-to for products like:
The second type of commercial insurance broker focuses on protecting areas of your business other than health insurance and medical benefits. Liability or property and casualty brokers should be your go-to for commercial insurance products like:
To an extent, commercial insurance brokers can be thought of as sales people for different insurance companies. Insurance companies focus in specific domains, such as medical, life or auto. Therefore, the sales people that they contract with focus on specific domains as well. There are certain licensing requirements by the state, some by the insurance carrier as well as a myriad of other factors.
In short, it would be nice if you could just have one business insurance broker to cover all of your needs, but in reality it's too complex. That’s why you have to have multiple brokers.
You don’t buy your house from the same person you buy your car from. Conversely, you don’t buy medical insurance from the same person you buy cyber insurance from. There are too many nuances and tricky situations with each type of insurance. Thus, having an expert in that specific area is good for you and your business, even though it adds a little bit of a hassle.
If your business is very small, say less than 5 employees, then maybe. If you are just looking to get it done and don’t really care that you will be paying higher costs to do so, then yes, purchase online. Fill out the questionnaire, click to accept terms and conditions, enter your credit card and call it done.
However, if you care about saving money, then it may be best to shop options. Buying directly online is very similar to going to a car lot and telling the sales person I am here to buy a car from you today. Do you think you would get the best possible price if they knew you were captive to them? This applies for employer health insurance as well as property and casualty insurance.
Secondarily, when you buy online, you are put into a straight jacket with your policy along with every other owner who purchased online. Do you think a restaurant owner has the exact same business insurance needs as an architecture firm? Not even close – not even if they have the same number of employees, or in the same city, etc. Don’t be put into a straight jacket. Your business is different.
If you are a small to midsize company, with 5-25 employees, you should not use an online broker for commercial insurance. There are some great insurance carriers that provide online quotes and they ultimately may be the best option for you, but you need to work with a insurance broker to validate that. It doesn’t cost you anything, and 9 times out of 10, you will save money.
Furthermore, working with a broker will provide you with a more customized plan for your needs. Your company is not like every other. That is why you are in business and generating revenue. Thus, you should make sure your health insurance policies and your liability insurance policies are tailored to what you do. The best way to do that is by working with a business insurance broker.
Yes, yes and yes. Choosing the right insurance broker for your company is an important decision for many reasons. For example:
The cost your company pays for insurance can depend on several factors, such as a broker’s relationship with the insurance carrier, how many clients that broker has with the carrier, how badly the broker wants to compete on price for your business, what the broker’s fees and commissions are, and more. All of these can end up affecting the price you get.
Different insurance brokers assess situations differently. Some may recommend cyber insurance, while others may not think it's valuable. Some may highly recommend a PPO or to be self-funded, while other brokers may not have a preference. Experience drives actions.
When you have an insurance claim that is not covered or a dispute with your insurance carrier, your business insurance broker is the one person that is there to be your advocate. Choose your partners wisely. Inevitably, the situation will come when you need them to stand up for you.
For these reasons and more, it’s crucial that you select a reputable, trustworthy and experienced broker for your business.
Generally, brokers are paid a commission which is baked into the premiums you pay to the insurance company each month. For mid to larger employees, often it is a flat fee based on the arrangement with an insurance advisor or consultant.
For the vast majority of small to midsize business owners, the commission is included in the monthly premiums. But this is only one part of the compensation. Commercial insurance brokers often also are eligible for and receive a “contingent commission” from each insurance carrier for whom they sell. These contingent commissions are based on metrics like how many renewals they had with that carrier, how many new employers they brought to that insurance carrier, how many lives from a medical insurance company, or how large the contracts are in P&C.
Always ask how your insurance broker is paid. You are paying for it, whether you know it or not, so ask. Often brokers will tell you that the insurance company pays them, and it does not matter who you pick. That can be true, but that is not the case the majority of the time.
Understand and ask what contingent commissions are paid. If you were to make $5,000 more in a bonus payment by putting a client with one insurance carrier instead of another one, would that influence your behavior? Probably so. That is the intent of the incentive from the carrier. It is incumbent on you, the employer, to ask and understand all the cards on the table. Only certain commissions and payments from carriers are required to be disclosed, so ask to see them all.
It never hurts to ask. For some policies, yes it is flexible. If you are comparing business insurance brokers, ask the question. If they want your business bad enough and it's in their control, they can and will move the commission down to make the overall cost more attractive to you.
Depending on the insurance carrier, some brokers have control over what commission they charge. Just like anyone selling a product, you want to sell it at the highest price that the market will pay for it. Commercial insurance brokers are the same way. That’s not wrong, that’s just business. Negotiate if you can. At a minimum, it never hurts to just ask the question and compare options. In doing so, you are being a responsible fiduciary to your company.
It doesn’t matter if it’s employee health insurance and the size is based on the number of people that work at the company, or it’s liability insurance and based on the revenue size of the firm – experience matters. Similar company sizes have similar issues, whether it relates to problems with the carrier, pricing, commissions or a host of other issues. Make sure your broker has experience with companies of your size.
Construction is different from banking, and the business and employee needs are vastly different. You don’t want to be the first patient a surgeon performs a new operation on, and you also don’t want to be the first construction company for an insurance broker for the same reasons. Make sure your commercial insurance broker has experience in your industry. There are common industry issues, whether it’s risk factors, macro economic issues, cyber-related, health-related or a myriad of others. Find an experienced expert.
Just because someone can sell you a product does not mean they are an expert in it. Insurance product types range significantly. On the health insurance side, it ranges from medical all the way to life insurance with stops at critical care and pet insurance. For liability and property and casualty, it ranges from medical malpractice to auto insurance. Ask, ask and ask again for documented experience. You want an expert. Make sure you have one.
Make sure all the cards are on the table. Understand commissions and contingent commissions being paid to the broker. Getting a bonus for specific actions as an insurance salesperson is not a crime, but you as the customer need to be aware of that to understand any motivations it may cause.
Just like when you shop for a new car all the way to a new vacuum cleaner, you read the reviews from other people like you. Business insurance brokers are no different. Ask to speak to current and prior clients. Ask why clients turned over. Read online reviews.
That’s where Mployer Advisor comes in. Our goal is to help employers find top-rated business insurance brokers.
Mployer Advisor is an independent third party. We provide documented experience by commercial insurance brokers, showing which industries they have experience in, which company sizes and which products. We offer the industry's only insurance brokerage rating, a proprietary score called an M Score that evaluates all of those factors.
Additionally, Mployer Advisor showcases customer reviews and feedback to help employers compare and evaluate different brokers.
Our goal is to lift up the entire insurance brokerage industry by highlighting top performers to ultimately benefit you, the employer, and your employees.
Search now for insurance brokers near you and find the best fit for your company.