Owning and managing a business can be an unpredictable experience. Planning around the great peaks and sudden valleys of business life can be challenging, but insurance can offer a valuable safety net. Unfortunately, the wide range of insurance policies and coverage alternatives can be difficult to understand. Insurance brokers can bear this load for you, walking business owners and benefits managers alike through the costs and details in order to find the very best selection for their personal circumstances.
Insurance brokers are experts in their field; they provide vital knowledge and support for professionals trying to choose the right insurance policy for their needs in exchange for commission and or additional fees. Commissions are usually based on a percentage of the annual premium (which can vary depending on the policy and insurer) and are included in your monthly premium, paid directly to the broker from the carrier. Fees, however, are often charged for extra services and are paid directly to the broker, typically from the client.
Captive and independent agents represent an insurance company (or companies) and rely entirely on commission; this means that they have a personal incentive to direct clients toward certain insurance carriers. Insurance brokers, on the other hand, represent the individual seeking insurance. Insurance brokers may receive a commission from the insurance company, which sounds like it would make it difficult to garner trust between the broker and the client. On the contrary, the commission continues the longer clients stay with and pay for their policies; the more satisfied a client is with their policy, the longer they’ll stick with it, and the more the broker will make. As a result, client happiness is a major motivating factor for brokers.
Alternatively, some brokers may only charge a broker fee in order to make a profit on the transaction. This serves to override that personal, and financial bias entirely. The base parameter of broker fees is that they must be reasonable, clearly disclosed, and typically must be accepted with a signature.
Whether you’re interested in purchasing business insurance or expanding the benefits offered to your employees, understanding the ins and outs of your options is essential to getting the coverage you need. Insurance brokers are key to this decision. Because they know the market, they’re able to recognize the difference between a great policy and one that is simply adequate. Because they know the law, they’ll be able to protect your business from accidental exposure to serious liabilities, such as bank debt or accounts payable debt. And because they know the industry, insurance brokers are kept up-to-date on the market and the options available for clients.
Although your broker will not be able to finalize a policy transaction, they can provide important insight into a number of different and complicated policy options and help you get the process started. Overall, they will:
Ultimately, the advantages differ based on your position: if you’re a benefits manager concerned about making the right decision for your company, you can rest assured that your recommendation will provide adequate protection and support for your company; if you’re a business owner, partner or senior officer, you can save time and money by trusting an experienced professional to do the heavy lifting; and if you’re representing a medium-sized business, you can find a partner to walk you through the process without wasting your time.
The complex nature of owning and running a business puts business owners and their representatives at the top of the list to benefit from the experience and expertise offered by an insurance broker.Look for the following qualities when searching for a broker:
Knowing what you’re looking for from a policy is as important as selecting an insurance broker. While you may be overwhelmed by the various options and laborious details, you should have a base understanding of the coverage you’re interested in obtaining. Take the time to do a bit of research on your end; an insurance broker can make solid recommendations but only you are aware of the specific needs of your company.
At the end of the day, insurance brokers are there to help. Whether you’re looking for assistance understanding the technical minutiae of a certain policy or are starting your search from scratch, an insurance broker can make your journey significantly easier. Although it may seem like extra work, paying attention to broker commissions and fees can improve your comprehension of the function a broker plays and lead to a more positive overall experience.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.