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.
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:
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.
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.
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. Use this calculator to see how much your insurance broker is making in fees and commissions.
In many cases, it could be more expensive not to use a 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.
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. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.
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