Efficiently running your company and keeping costs down is difficult enough without wondering how much to spend on business insurance. For many businesses, an insurance broker offers you more time and more savings.
An insurance broker can save your company money by procuring better rates and protection on insurance policies than you could purchase on your own.
And the best part? The insurance company pays them – not you.
In this post, we walk through the ways an insurance broker can save your company money, the costs involved in brokerage services, and whether hiring a broker is worth it.
How can an insurance broker save money for your business?
A broker’s main duty is to analyze your risks and determine the best insurance coverage and best rates for your business. They will also explain your coverage options in a way that empowers you to make informed decisions on your insurance and benefits.
Here are five ways insurance brokers can save money:
Brokers shop through multiple insurance carriers, so they are free to choose the best policy across carriers.
A good broker will match your business with the insurer and policy that fits your needs and provides you the best value for your dollar.
Brokers could also offer policies at rates that are unavailable to regular insurance buyers. They look for ways to customize or bundle policies that agents might not be able to.
Insurance brokers make sure your business has only the coverage it needs. Being overinsured or underinsured can cost thousands. Brokers can stop you from paying for unnecessary coverage and from buying insurance that will not protect you.
Brokers searching for the right coverage and rates year after year can save money in the long run. Your brokerage could help build loss-prevention programs or take advantage of insurer programs for better renewal rates.
A good insurance broker will work with you to research coverage, conditions and prices, and can recommend an insurance policy that best fits your company.
Is insurance more expensive through a broker?
Insurance brokers certainly don’t work for free, but their clients often aren’t the ones paying. Brokers help you find, purchase and renew the best insurance policy — usually at no direct billable fee.
Insurance is generally not more expensive through a broker, because commissions are paid by insurance companies and are included in the premium cost.
Put another way, insurance brokers do not charge clients for their services. Instead, the insurance carrier pays them a commission based on the policy’s premium. Commissions are a percentage of your premium costs, and are included in the retention component of the insurance premium.
Rates and insurance premiums are regulated by state law, and those regulations vary. But whether or not you buy insurance through a broker, the premium for your policy generally stays the same.
If you shop for coverage on your own, you would pay the same price, but the insurer would not need to pay a commission – except to their salesperson. Broker commissions are usually tied to premiums.
What about broker fees?
Some insurance brokers offer consulting and advisory services beyond enrollment and renewals, for which you might pay a fee instead of, or in addition to, their commission.
Many states have restrictions on these non-commission payments, but broker fees rarely eclipse more than 15% of the premium. You should know if your broker or agent charges fees, and what those fees are, before they start searching for insurance policies on your behalf.
In many cases, it could be more expensive not to use a broker.
Is it worth it to use an insurance broker?
Using a broker is one of the best ways to make informed choices about business insurance and benefits policies. You will not have to learn about each coverage type and insurance carrier, because they can make it easy to understand your options. Brokers are are the experts in their field.
For many more reasons, it is worth it to use an insurance broker.
A broker eliminates your need to spend time learning about insurance and policy options to determine which fits your business. By building insurance packages that are customized for your company’s needs, insurance brokers allow you to focus on other things.
Their duty ensures that brokers advise and work for you when purchasing coverage, not beholden to a particular insurance company. For example, if your existing insurer doesn’t offer to bundle two insurance policies for your growing business, an insurance broker can search for a carrier that will.
Through licensing requirements and experience, brokers have specific knowledge about insurance and carriers, from policy limits and supplemental coverage to renewal options and rate discounts. An insurance broker can eliminate uncertainty, providing advice to help you choose optimum coverage – without becoming an insurance expert.
Most insurance brokers provide services throughout your policy term, helping with claims, offering advice on changing policies, ensuring compliance, and keeping track of regulations. Their understanding of technical terms in policies may help your business take full advantage of your coverage.
When you file a claim, your insurance broker can act as a liaison between you and your insurer. Because brokers work for you, they offer advice that is helpful.
Smart businesses have good insurance and benefits. The best way to find good insurance and benefits is through a broker, consultant, or advisor who knows what you need and provides solutions and great service.
But, how do you know who to hire? With seemingly endless options, you feel under pressure to choose the right one. We believe that transparency, information, and choice leads to better hiring decisions.
It's why we created Mployer Advisor, a free broker marketplace that allows employers to compare brokers, consultants, and advisors in one place.
To get started, Find Brokers near you to get matched with a short-list of qualified brokers.