13 Signs It’s Time to Fire Your Commercial Insurance Broker

Here are some key indicators, provided by award winning risk managers, that you can use as benchmarks to determine if your commercial insurance broker is doing a good job.

By: Dan Reynolds | October 4, 2019

As a risk manager, your commercial insurance broker is a key component of your overall success. A good broker is going to be an extension of your department and have a deep understanding of your industry and the individual needs of your company.

If your broker is falling short in any of the following areas, it might be time for a change.

1) Displaying a lack of insurance expertise.

You should be able to trust that your broker is advising you to purchase the correct coverage.

Your broker should be asking you thought-provoking questions and conducting an analysis of your risk during the insurance renewal process. You want to be able to trust that you have the broadest coverage terms available.

Your broker should be peer-reviewing your policies to make sure there are no coverage gaps or areas for improvement. Attention to detail and delivering on time is important.

2) Not having direct links and relationships with insurance markets.

The broker’s relationship with insurance markets will pave the way for you to have meaningful conversations and obtain competitive quotes.

They need to know the markets that have the most interest in your program and the most competitive pricing in your industry.

Your broker needs to be your advocate for negotiating policy terms and collateral. If you sense that your broker lacks any of these traits or connections, it’s time to start broker shopping.

3) There is a disconnect between the account executive/producer and the service team.

It’s important for your brokerage to have bench strength.

Service from your brokerage team extends beyond the annual insurance renewal, and the entire team needs to understand your industry and risks in order to properly service your account. It is important for your broker and team to ask relevant questions about your company so that they make sure they are providing you with the best insurance and service.

The broker should also support you and not inundate you with paperwork and procedures that they should be handling for you.

4) The customer service from your brokerage team does not meet your needs.

One of the most significant signs that your broker relationship needs reworking is the absence of regular and thoughtful customer service. The primary role of the broker is to add value to the client’s business by advising on matters of insurance and general risk management. That’s in addition to representing your company in the marketplace.

This means that your broker should be invested in your operations and how you approach the important issues. If your broker is not attentive to your needs, doesn’t provide valuable insights into your problems, or is generally apathetic to your account it may be time to make a change.

Accessibility and ease of doing business are important when it comes to risk management and insurance.

If you need to obtain a certificate of insurance or add insurance coverage to a new risk, you need an immediate response from your team to allow you to meet your needs. Anything short of that should raise red flags.

5) A lack of claims expertise.

When your company experiences a difficult claim, it is important to have a claims advocate in your insurance broker.

The claims advocate should be able to assist you with everything from interpreting the policy to fully understanding a reservation of rights letter issued by the insurance company. Your advocate should be able to assist you with the investigation of your claim and the reporting of it.

A broker who is a true claims advocate should also be keeping you abreast of jurisdictional changes. If your broker can’t check all of the above boxes, you are not getting the service you should rightfully expect.

6) Cloudy vision of emerging risks.

Your broker should be making you aware of emerging risks and educating you on the insurance coverage available to minimize your risk.

An emerging risk such as cyber security can be very complex when it comes to understanding available coverages. You should consider your broker’s process for identifying and quantifying those risks.

Your broker should be leading the way in encouraging insurance carriers to offer innovative products to meet your ever-changing risk profile. Data analytics and predictive modeling can also be great tools to the broker to share emerging risks and vulnerabilities you might have.

If you’re finding out about emerging risks before your broker is, the relationship isn’t doing you many favors.

7) Lack of specialized experience.

Your broker should have specialized experience globally to act as a consultant when the need arises. They should be providing global insight on an annual basis.

If you sense the waters of a particular risk are too deep for your broker to handle, it’s time to find a partner who can swim better.

8) Not offering you true coverage choices.

Your broker tells you they are shopping for the best coverage and price, but they walk in with the same company year after year. Loyalty to an insurance carrier has its place and can pay off in some ways.

But showing you the results of a widespread submission process is the only truly good sign that your broker is really working on and getting the best terms for you.

9) Last-minute renewal process.

A real no-no is if your broker is sending you a renewal application 30-60 days before the renewal. Generally speaking, they should be working on renewals at least 90 days out.

One award-winning risk manager said his property broker works on renewals about 120 days out. They do happen to be in Florida, which experience shows, can see wild fluctuations in property pricing from year to year.

10) Continuous Errors and Omissions.

Everyone makes mistakes, and brokers are no exception. However, if you notice significant inconsistencies between policy terms, or your insurance policies don’t match the binders issued by the carrier, you may have a bigger issue on your hands. The lack of attention to critical details can put your company in a bad spot when a claim arises, and there is nothing more frustrating than being faced with a problem that you don’t have the tools to fix.

11) Poor Market Results.

Nearly all brokerage firms sell on service and value added, but price still remains one of the driving factors in the consumer market. If you are consistently getting outbid on opportunities or you have feedback that your insurance isn’t competitive with your peers, there are two logical possibilities: 1) Your competition is carrying weak coverage and paying appropriately, or 2) your broker is not performing well in the marketplace on your behalf.

This can be tricky to address, as each business segment hits different pain points with certain underwriters and markets. It’s important to take advantage of any benchmarking studies your broker might offer, as this will give you a better idea of how much you’re paying in relation to your peers. If your broker is unable or unwilling to provide this, there are numerous other firms who have enough data to give you a reliable snapshot around pricing.

12) Being Late With a Binder or a Renewal.

Completely unacceptable, there is no excuse for this.

13) Limited availability.

If your broker is not available to you or doesn’t answer email after 5, or on weekends or holidays, you have problems. Claims happen at these times too! &

2019 Risk All Stars Donald Noel, Susan Shemanski and Dave Glasser contributed to this piece.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected].

Consistency and Stability

Sandy Bigglestone, Deputy Commissioner for the State of Vermont’s Captive Insurance Division

With the commercial insurance market so unstable, companies are turning to captives to house their exposures. Vermont, a long-time domicile, is getting increased attention because of their strong reputation and their leadership as the top domicile worldwide.

“All stakeholders enjoy the stable political and regulatory environment Vermont has to offer to operate in,” Bigglestone said.

Of course, a lot of consideration goes into deciding whether or not a captive is the right choice for a particular company. Businesses need to assess their exposures and their books to make sure they can adequately operate a captive.

There are significant advantages, however. “For low frequency, high severity risks, captives can access the reinsurance markets directly, so it’s very attractive for businesses to put a captive in place,” Bigglestone said.

And carriers are more accepting of captives as part of a broader insurance program.

“Captives are changing the relationship businesses have with commercial carriers,” Bigglestone said. “Commercial carriers are wanting to see companies with skin in the game; therefore, the relationships have evolved to be less transactional and more strategic.”

Balancing Bureaucracy

With 76 global domiciles, companies have a lot of options when it comes to selecting a captive partner. “Captive insurance domiciles compete globally for the business,” Bigglestone said. “If you were to put all 7,000-plus captive insurance companies around the world, all in New York, it wouldn’t have the same economic impact as 700 captives in Vermont does. The captive insurance industry is very important to our state and we will continue to support it in any way we can.”

Businesses should look for domiciles that balance a need for quality regulations with a process that isn’t overly bureaucratic and is seamless for business owners to navigate.

“Companies are attracted to an environment with quality regulatory standards and a stable regulatory environment,” Bigglestone said. “Vermont sets the regulatory standard in terms of financial analysis and examinations.”

In addition to quality regulations, firms will want to seek out a domicile that is agile enough to license captive insurance companies that fit their unique needs. It is important that a domicile have firm but fair regulation and the experience to consider new ideas and implement them. Companies must consider a variety of factors when choosing a domicile and not everyone will be the right fit for every company.

“You have to consider the captive owner and the industry sector that that owner operates in, as well as the insurance risks that are going into the captive program,” Bigglestone said. “Captive laws and regulations have to have a reasonable degree of flexibility to accommodate all the varying needs of owners and then impose rules based on the merits of each captive program.”

She added that creativity is a critical part of the process: “The ability to vet concepts and ideas with trusted individuals is key to having quality standards,” Bigglestone said. “And it can make captives appealing to insureds who are tired of commercial carriers not meeting the needs of the business, and who desire more control over their insurance programs.”

“When you think about the commercial marketplace, commercial insurers are supposed to operate in each jurisdiction in a competitive manner. Commercial carriers often look the same. They sell auto coverage to anyone with a driver’s license. The rules and regulations imposed upon commercial insurance companies are designed to be more formulaic for that reason,” Bigglestone said.

“Uniform regulatory standards apply to commercial carriers for the protection of the policyholders. These are standards all insurance regulators focus on, and standards captive insurance regulators need to understand, but with a specialized focus.”

A Quality Domicile Built for the Future

A combination of experience, regulatory standards and talent make Vermont a top domicile for companies looking to form a captive. The longevity of licensing captive insurance companies for over forty years is a testament to the quality work they’ve provided in the past and will continue to provide for many years to come.

Vermont’s reputation has helped the state attract and retain top captive talent, ensuring the businesses it serves are in good hands. The state has 32 employees dedicated to captives, and their average employee retention is 15 years. The Vermont Captive Insurance Association, the largest captive insurance trade organization, also helps companies connect with professional services needed to make their captive successful.

“There’s a whole host of service providers with proven expertise right here in Vermont,” Bigglestone said.

Taken together, Vermont’s resources, expertise and talent make it a prime domicile. They’ve been on a growth trajectory over the last few years and that’s unlikely to change anytime soon. Companies can trust their captive will be in good hands when they choose Vermont.

“Vermont has always competed on quality,” Bigglestone said. “We do have a mission and that hasn’t changed in over 40 years. It’s to maintain a system, or domicile that attracts quality business to Vermont, to promote our reputation in the industry, and to uphold a regulatory framework to protect the solvency of the companies that choose to place their business here.”

To learn more, visit: www.vermontcaptive.com

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with State of Vermont. The editorial staff of Risk & Insurance had no role in its preparation.

The State of Vermont, known as the “Gold Standard” of captive domiciles, is the leading onshore captive insurance domicile, with over 1,200 licensed captive insurance companies, including 48 of the Fortune 100 and 18 of the companies that make up the Dow 30.

13 Signs It’s Time to Fire Your Commercial Insurance Broker

1) Displaying a lack of insurance expertise.

2) Not having direct links and relationships with insurance markets.

3) There is a disconnect between the account executive/producer and the service team.