1. What is your relevant industry experience?
Getting the right insurance broker can be a major asset for your business and its risk-management approach. They should be able to advise you on the best cover for your circumstances and source the most competitive prices in the market. Like any profession, however, some brokers are better suited and have more experience in specific areas than others.
For instance, some insurance brokers maintain dedicated practice groups that work exclusively with organisations from particular industries. Others have created unique placement facilities or insurance schemes that leverage the group buying power of organisations from the same sector to achieve more competitive pricing and greater levels of cover for their clients.
Brokers that specialise in or work with a large number of organisations from a specific industry are also more likely to have greater awareness of any outside influences that affect companies who operate within that sector, whether it be legislative reform, or new or emerging risks impacting certain segments of the market.
Ultimately, the more a broker knows about your industry, the greater their ability to deliver the most appropriate, cost-effective insurance solutions available in the market, so do your due diligence.
2. Do you have access to a broad range of domestic and international insurers?
The truth is that many brokers use only a small number of insurers, or in some cases give preference to specific insurers. This may be acceptable in some cases, but it can potentially lead to a scenario whereby you do not get the best deal on your insurance.
Some brokers have developed exclusive online quoting software that limits their marketing efforts to those insurers who subscribe to such platforms. Others have limited access to international insurers, which means that you may be missing out on more competitive markets that can deliver better results from either a pricing or coverage perspective, or sometimes both.
So be up front about asking your would-be broker which insurance companies they represent, which markets they have access to (both locally and overseas), and which insurers they would recommend for you, so you can determine whether they are the right fit for you.
3. What would your recommended go-to-market strategy be for us?
This is a key question in the current climate. Insurers are being highly selective when deploying their capacity. They are scrutinising clients more than ever as they determine which businesses they are wanting to insure.
This means that your broker’s performance during the renewal process is more important than ever before. The manner in which your business is presented to both new and prospective insurers is crucial. Businesses that fail to demonstrate a high level of risk maturity, or those who enter into negotiations with insurers using poor-quality information, will likely find themselves more susceptible to the harsh market conditions. Remember, in today’s market, insurers will typically fill any gaps in information with premium.
Many brokers often boast about their depth of resources across multiple disciplines or claim to have stronger relationships with certain insurers given their size and position in the marketplace. While advantageous, these add little to no value if they are not harnessed correctly and used to further your interests with insurers.
4. How do you structure your fees?
Organisations should always strive to get full transparency around insurance-related costs. This includes your broker’s income as it relates to the management of your insurance program.
Ideally, your broker will be remunerated solely by way of an agreed fee for service. This removes any scenarios in which your broker is incentivised to negotiate exclusively with those insurers who pay the highest levels of commission. Some brokers also have profit-sharing arrangements in place with insurers that further incentivise them to place your business with specific insurers who may not necessarily be the best fit for you.
Commissions can range anywhere from 10 per cent to as much as 35 per cent of the base premium amount. A broker can earn considerable levels of income when earning commission on an account; income that may be grossly overstated when compared to what another broker may charge on a flat ‘fee for service’ basis.
So getting clarity around exactly how much your broker earns, and by what means, will not only help to ensure their remuneration is fair and reasonable, but also helps in determining just how appropriate and cost-effective your insurance arrangements really are.
Navigating the world of business insurance can be fraught. So contact Australia’s leading specialist consultancy group that supports businesses through the complex exercise of implementing efficient insurance programs