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Insurance Consultant

Should I Hire an Independent Insurance Consultant?

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Published On: February 10, 2021

Using an insurance consultant, advisor, or broker to find and implement the right insurance policies for your company is a good way to save time and money. But how do you know when to hire one?

Some insurance brokers offer strictly brokerage services, finding the best insurance and benefits policies and assisting with renewals. Others, acting as insurance consultants or advisors, offer additional services and strategies for more complex business insurance needs.

You should hire an independent insurance consultant if you need ongoing expertise about insurance and benefit options, beyond finding and purchasing a policy. A consultant can bring your company savings, insights, and strategies that help shape your risk management and human resources plans. 

In this post, we explore the main duties of an insurance consultant, the pros and cons of hiring one, and how to find a business insurance consultant that fits your needs.

The Main Duties of an Insurance Consultant

At a basic level, an insurance consultant may advise on insurance policies and claims, procure employee benefits, offer plan administration and provide compliance documentation. The consultant will be involved in your plan throughout the year.

Along with administrative tasks, onboarding and billing reconciliation, insurance consultants give your company advice to control costs, manage risks and process complex claims. A consultant is particularly helpful when you need specialized insurance expertise or services. 

Insurance consultants typically have these responsibilities:

  • Has expertise in how a business operates and how benefits and HR impact operations and employee management.

  • Assists with administrative tasks, including enrollment, onboarding, automation and billing reconciliation.

  • Works with decision makers on policy, strategy and execution.

  • Explores solutions  that impact financials.

  • Actuarial and other specialized services.

The hourly or project based fees for an insurance consultant depend on the size and complexity of the services and hours provided. An insurance consultant or advisor can be an important resource and partner in adding value.

Insurance Consultant vs. Insurance Broker

Business owners and HR professionals might wonder whether they need a broker, consultant or advisor for their insurance and benefits needs.

Since a consultant and advisor usually have the same responsibilities to clients, we can generally interchange their definitions. However, business insurance consultants and business insurance brokers have different responsibilities – primarily in the scope of their services to employers.

Historically, an insurance broker typically worked on commissions while a consultant worked for a fee. However, many brokers now include fees and many consultants charge or are capable of offsetting fees with commissions. The reason for these changes is the evolution of additional administrative services or solution partners provided by both brokers and consultants.

The more important distinction between brokers and consultants is a transactional vs. consultative relationship with your business.

A broker’s primary focus, by definition at least, is helping you buy and renew insurance and benefit products. They may offer additional services, such as enrollment assistance and administrative work, but the scope of services is more specific. 

A consultant or advisor may provide those tasks associated with procurement and enrollment, but also manages your company’s collective benefits package in ways that improve your overall human resources strategy and other business objectives.

Consultants offer ongoing support and expertise into how a business operates and how benefits, finance and HR impact operations. Beyond assisting with administrative tasks, they explore options aside from policy costs that can improve financial and operational conditions within your company.

Pros and Cons of Hiring an Insurance Consultant

Whether a consultant, advisor, broker or agent, the quality of advice provided by your insurance representative is their most valuable asset.

A good consultant or advisor will understand which insurance policies best fit your business and will tailor coverage options to maximize protection and minimize cost. When evaluating which brokerage firm you partner with, ask yourself whether or not your team feels the value in the service they provide.

Here are some of the “pros” of hiring an insurance consultant:

  • Licensing requirements, coupled with experience in their field, make consultants well suited for business owners with complicated insurance needs.
  • Consultants can help strategically plan for the future needs of your business, including short- and long-term financial modeling and risk management.
  • A good consultant will use competitive benchmarking to assess and improve the role of benefits in employment recruitment and retention.
  • When you hire an insurance consultant, they work directly for you – not the insurance companies. They can still negotiate lower rates for clients based on relationships with insurers.
  • Consultants provide a partner approach and will be involved in your business plan several times per year.
  • A consultant can be useful if your operations require specialized expertise based on risks in your industry.

Here are some of the “cons” of hiring an insurance consultant:

  • Not all small businesses need to the expense of an insurance consultant. Sometimes an agreement with a broker will suffice.
  • Picking the right consultant is crucial. They require deep expertise surrounding businesses like yours in order to solve your specific insurance and benefits problems and provide value.
  • Consulting fees are often tied to the complexity of the services or project.
  • You can't buy insurance from an insurance consultant. A consultant must hand over the account to an insurance agent or insurance carrier directly to initiate the policy. But they can help you find the best policy.

How to Find an Independent Insurance Consultant

Independent insurance consultants and advisors can help you choose coverages and risk-management strategies that make the most sense for you.

There are about 413,000 insurance consultants and associated businesses in the U.S. as of January 2021, according to IBIS World. How do you find the independent insurance advisor that is right for your company?

When you are looking to hire a broker, consultant or advisor, you can focus on three things: what they do, how well they’ve done it, and how they get paid. Insurance buyers should compare brokers and consultants based on need, professionalism, demonstrated knowledge in insurance, understanding of your industry, transparency and fees and or commissions.

The quickest way to find qualified insurance consultants is through Mployer Advisor, a free marketplace that allows employers to compare brokers, consultants, and advisors in one place. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to catch the latest episode of This Week in Benefits.

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Anthony Waters

Senior Vice President of Strategy and Product, Mployer Advisor

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