What Is the Hourly Cost for an Insurance Consultant?
Published On: February 10, 2021
As regulations and business expenses rise, so has the value employers place on advice about insurance and benefits. Insurance consultants and advisors are sought for many risk management and insurance services.
The hourly fees for an insurance consultant depend on the size and complexity of the insurance policy being taken out, along with the scope of the consultant’s services.
It is critically important to know what is included in standard fees and/or commissions for consultants, advisors, and brokers as you look for help with insurance and benefits.
In this post, we explore what it costs to hire insurance consultants and what makes these advisors valuable.
What Does It Cost to Hire an Insurance Consultant?
The cost of using a consultant to insure your business depends on the type of business, amount of coverage you need, optional coverage policies, and complexity of your insurance and benefits management.
A consultant’s fees, also called “intermediary fees,” are fees that insurance buyers pay consultants or brokers on top of a policy’s premium. The cost to hire an insurance consultant ranges depending on the size of your company, your operations, and complexity of the insurance policy or services provided.
Broadly speaking, commissions and fees usually fall between 10% and 25% of the base premium amount. It all depends on your state, your size, and what type of insurance you need, but average consulting fees are typically 15% of the policy premium.
Traditionally, an insurance consultant works on a fee for service, and an insurance broker works for commission based on the policy’s premium.
Consultants usually charge fees instead of, or in addition to, a commission that’s included in your premium payment. This is in the form of a direct invoice of billable hours or direct offset billable hours with commissions received.
As opposed to brokers, consultants are usually not paid commissions from the insurance company, which means they charge a consultant’s fee for services. Unless of course, the client prefers them to receive commissions and offset their billable hours or fees.
Why Hire an Insurance Consultant for Your Business?
A good insurance consultant will understand coverages and policies tailored specifically to your business, and will find ways to maximize protection and minimize cost with your coverage.
Consultants should be involved with your business strategy and involved with you several times per year or as often as you need their services.
Here are key services that insurance consultants offer:
- Find and implement insurance policies, advise on employee benefits, offer plan administration and provide compliance documentation.
- Create strategic, long-term plans suited to the needs of the business, including financial modeling, risk management and large claims processing.
- Competitive benchmarking to assess the role of benefits in recruitment and retention, making benefits a talent attraction and retention tool.
- Specialized expertise in Risk Management and Health and Welfare.
How Do I Vet an Insurance Consultant?
There are about 413,000 insurance consultants and associated businesses in the U.S. as of January 2021, according to IBIS World. But how do you vet an insurance consultant to find the one that is right for your company?
Insurance buyers should compare brokers and consultants based on professionalism, demonstrated knowledge in insurance, understanding of your industry, transparency and cost.
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. The right expert for your business will have a proven track record of helping businesses like yours solve their insurance and benefits problems.
The quickest way to vet your insurance consultant is to visit Mployer Advisor, a free broker marketplace that allows employers to compare licensed insurance consultants in every state. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.
Director of Content, Mployer Advisor