Navigating the business insurance landscape requires guidance, and an insurance broker can handle that research and process for you. But not all brokers are made the same, and some business owners wonder, “Can I change my insurance broker?”
The resounding answer is yes, you can absolutely change your insurance broker. As the insurance-buying client, you can replace the broker managing benefits and insurance for your company.
A good broker will act as an extension of your business, with deep industry expertise and an understanding of your individual needs. Switching to more knowledgeable brokers or advisers could provide a more personalized plan with similar and even lower costs. In most cases, you can also change your insurance broker while keeping the same insurance company and policy.
In this post, we discuss when you should change your insurance broker, what it costs to switch, and how to vet your new insurance broker.
When should I change my insurance broker?
More than 40% of businesses do not feel satisfied with their current broker, and 21% have changed brokers in the past three years, according to Zywave.
Insurance buyers can easily become dissatisfied with the services of typical insurance brokers, prompting them to want a change. Dissatisfaction can come in many forms, including:
A lack of tangible value stemming from an insurance broker
An insurance broker’s lack of knowledge about your industry
Slow response time or infrequent communication from your broker
A broker doesn’t understand or appreciate your business’s specific needs for insurance or benefits
Unwillingness to keep up with technological innovations, such as online business insurance management
At a minimum, you should be able to trust that your broker is finding appropriate coverage for your company. If your broker is not attentive, and doesn't provide valuable and specific insights to you as a client, it may be time to consider a broker change.
The best brokers will ask you thought provoking questions and continually analyze your risk profile, especially during the renewal process. However, if your broker only shows interest when annual renewals arrive, they might not be reliable during an emergency.
Moreover, your insurance advisor's relationship with insurance markets dictates their ability to have meaningful conversations and find competitive quotes. They need to know which policies and benefits best fit your organization and insurance price ranges in your industry.
Your broker should be a partner all year, not just once a year. Highquality service providers should talk you through emerging risks and educate you on improved insurance coverage as it becomes available. Nearly 30% of businesses felt their broker lacked an understanding of their company or didn't have expertise in their industry, according to the Zywave survey.
If you experience any of these service problems, you should consider changing your broker. The right broker representative is out there.
What Does it Cost to Change Insurance Brokers?
Businesses might worry that switching insurance brokers could lead to increased premiums for their coverage. This is usually not the case.
In general, you can switch to any broker licensed in your state without additional fees. Plus, it's possible to switch insurance advisors without changing your current policy.
Typically all that is needed to change brokers is an effective dated broker of record letter change on your company letterhead that names the new broker as your new broker of record. This letter is sent to each of your inforce insurance companies representatives.
The insurance companies will then pay your existing broker commissions until the new broker is named and at that time, the new broker will start to receive the ongoing commissions and be on record to service you as a client with those insurance providers.
In some states that don’t recognize brokers and only have licensed agents, where the agent’s services provided mirror what would be considered typical broker services, this change letter may be called an Agent of Record Letter. Transfer of broker may or may not take place during renewal.
Are you looking for a second opinion on your company’s employee benefits plan? Find a broker that can provide you with a free analysis.
How do I know my insurance broker is working in my company's best interest?
When you hire an insurance broker, they work directly for you – not the insurance companies.
A broker's main duty is to understand your business and find fitting insurance policies within your budget. They should also provide ongoing services to determine if and when to change policies, assist with compliance. Some may help resolve claim issues.
Brokers rely on repeat business, so they are financially motivated to choose the best coverage for your company on an ongoing basis. Insurance companies also frequently offer incentives to brokers for policy renewals, so they should work hard to find satisfactory policies from the start.
Good brokers often can provide a procurement process and negotiate lower rates for clients based on their knowledge, history and relationships.
But ultimately, insurance contracts are between your business and the insurance company, regardless of the broker who helps manage it. If you are dissatisfied with your broker/advisor, or you suspect they are not doing their best work to aid your business, you should explore your options for changing your representative.
How do I vet an insurance broker?
There are about 413,000 insurance brokers and associated businesses in the U.S. as of January 2021, according to IBIS World. That means you have plenty of options to choose from when vetting a new insurance broker.
If you are ready for a change, you will first need to explore your options. The fastest way to find a new broker – whether or not you plan to keep your current insurer – is through Mployer Advisor's proprietary M-Score can show you how different brokers rate in terms of industry expertise, transparency and cost.