Is It Time for a New Broker?
Do you question whether you are getting the most value from your insurance broker? Are you doing everything possible to keep costs down and or feel that your benefit package is a commodity and not necessarily an employee retention tool?
Are you starting from scratch and need a new insurance broker?
The best first step is an insurance broker Request For Proposal, or RFP.
What is an RFP?
The first step when seeking health insurance for your company or commercial insurance coverage for your business whether you’re purchasing coverage for the first time or whether you’re considering changing policies, brokers, or carriers – usually starts with sending out RFPs to several insurance brokers and/or brokerage firms.
As the name implies, RFPs are simply requests made on behalf of the company which are typically sent to multiple brokerage firms in order to begin the process of vetting potential brokers with which the company may be interested in working.
While RFPs are in many ways synonymous with getting ‘quoted a price,’ these proposals often include additional information beyond merely the cost of services and coverage, which can be greatly beneficial in determining the range of services offered as well as the benefits (and potential detriments) of working with the particular brokerage firm providing each proposal.
Of course, in order to send out these RFPs, a company must first have identified potential brokers that they believe may be a good fit for assisting in their insurance coverage acquisition process and from which they attain more information.
Learn what makes a good insurance broker and see how to identify ones best suited to the needs of your business.
How Regularly Should I Be Sending Out New RFPs?
The short answer to this question is that RFPs should be sent out anytime your business is considering new or different commercial insurance coverage, but there are a number of other considerations that should be taken into account as well as potential events that may serve as good catalysts to trigger the need for change in an insurance broker and the accompanying issuance of new RFPs.
Company Size: Often the most important consideration to evaluate when reconsider your company’s insurance brokerage needs is simply the relative size of your company. Operational efficiency is the primary consideration here, as larger companies tend to have greater institutional controls in place and a more regimented system that requires the use of resources that could otherwise be repurposed to another endeavor more immediately necessary for the furtherance of the company’s core business interests. Simply put, your HR team or whomever may be running the RFP process presumably has other responsibilities to attend to beyond endlessly reevaluating your insurance and benefits packages. Additionally, larger companies typically have more stakeholders with a greater variance of interests that need to be accounted for, which can take time and additional resources to properly survey.
For larger companies (over 1,000 employees is a good benchmark for these purposes) without any other specific catalyst that triggers a reevaluation of your insurance needs/coverage a good timeline to adhere to, with an accompanying issuance of RFPs whenever that reassessment leads to the desire to explore additional options.
For smaller companies, the process of insurance and broker evaluation is usually much simpler and can be conducted more regularly without encountering the degree of inefficiency that larger companies often face. In such cases, the 3 year timeline between broker reevaluation mentioned above would be on the longer end of the spectrum, with annual or biennial reevaluations often being appropriate.
Other Catalyzing Events: Beyond company size and a regular brokerage reevaluation schedule, there are a number of events that often indicate that it’s a good time to reassess your company’s insurance coverage and potentially issue a new round of RFPs.
Strategy: The most proactive reason to reconsider your company’s insurance is for strategic purposes. With cost cutting as a motivation for seeking cheaper insurance options falling on one end of the strategy continuum, the other end of that is occupied by comprehensive benefit strategies that have become critical tools for attracting and retaining top talent. In pursuit of such a comprehensive benefit strategy, an annual survey of employees needs and satisfaction-level with current coverage and benefits options can be very helpful in making sure your company stays highly competitive in the talent market.
Change: While not as deliberately proactive as reevaluating your company’s insurance needs for strategic reasons, there are a number of changes that can serve as opportune catalysts for just such a reevaluation. Change in your company’s HR manager tends to be a good time to reassess the insurance coverage. Also, change in personnel at your brokerage firm, especially with your company’s direct contact or trusted advisor, might be a good time for a reassessment. Finally, and not to be understated, change in your level of satisfaction with your insurance coverage may be the most important catalyst for reevaluating your insurance coverage needs.
With all these considerations in mind, it’s also important to note that aside from the potential inefficiencies involved with the time and resources required to do so, there is no bad reason to reevaluate your insurance coverage and business insurance broker. The desire to refresh a policy that may feel otherwise stale or outdated is more than enough reason to look into making a change. Such decisions should always be made on a case-by-case basis and with the needs and context of your individual company in mind at the forefront.
How Many RFPs From Different Brokers Should I Request?
Because RFPs are non-committal, there is theoretically no cap on the number of RFPs that a given company could issue, but there are practical limitations and efficiency considerations that should be accounted for when deciding how many proposals are requested.
A good analogy might be requesting quotes from multiple contractors for the construction of a new warehouse. In such a scenario, your company could (in principle) request as many quotes as there are contractors, but of course that would be a ridiculous and excessive time-wasting exercise in practice. Instead, you would be wise to narrow your search at the outset based on which factors are most important to your business, including local proximity, specific expertise (i.e. warehouse construction experience), recommendations/reputation, or any other factors you may wish to weigh in order to set the parameters of your search criteria as narrowly as desired before requesting quotes from the contractors deemed most likely not to waste your time.
The process of pre-vetting potential brokers in advance of sending out RFPs is an equally valuable preliminary step that can optimize the scope of your company’s search as well as allocating your time, energy, and resources more efficiently and effectively. To identify and locate a group of strong brokerage candidates in the pre-vetting phase of this process prior to sending out formal RFPs, search Mployer Advisor today.
About Mployer Advisor
At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.