Why Quoting Alone Isn’t Enough: Choosing the Right Insurance Broker for Long-Term Security
Let’s be honest: If you had to pick between two insurance brokers or agents, you’d probably highly consider the one with the better price offer. But choosing a broker requires going off of more than a quick quote, especially if you want the best and most suitable insurance coverage and risk management solutions. Truly understanding the different types of insurance and coverage options is essential for businesses big and small. To make things a little easier to navigate, we sat down with our Commercial Insurance Consultant Alex Kops, who has a wealth of information on this topic. Here’s what he says about why it’s crucial to work with a dedicated insurance professional—one who brings experience and insight to your insurance needs rather than just a low quote.
Focusing Solely on Insurance Quotes Can Be Risky
Relying on insurance quotes alone often leads businesses down a narrow path, focusing on immediate costs without evaluating the quality and breadth of the insurance coverage being offered. Many small business owners in high-risk industries, like construction or healthcare, know the right policy is about much more than the premium price—it’s about choosing an insurance agency or insurance expert who can truly help protect their business in the long term.
In today’s hard insurance market, underwriters are overwhelmed with submissions, especially in states with unique regulations. Underwriters prioritize clients represented by insurance brokers with a proven track record. When a business relies solely on insurance quotes and pricing comparisons, they might inadvertently position themselves as a “price shopper,” which can be a red flag for insurance companies. Insurers may then offer restrictive terms or limited insurance options, compromising the business’s ability to get coverage that genuinely fits their insurance needs.
Consulting vs. Quoting: The True Value of a Consultative Insurance Broker
At Snellings Walters Insurance Agency, we’ve seen how transformative it is for clients to focus on a broker’s consultative approach. A consultative broker collaborates with clients to assess risk, review types of insurance they might need, and ensure they’re protected in ways beyond just meeting a bottom-line price.
Take, for instance, a large contractor with an annual insurance policy spend nearing $2 million chose to work with us instead of shopping with multiple brokers. In doing so, this client gained access to over 30 important coverage improvements, filling significant gaps in their existing insurance plan. Additionally, though not promised on the front end, we were able to save them over $250,000 by following our process and granting us full access to the insurance market to shop their insurance on their behalf.
Choosing a Broker with Vision and a Proactive Approach
When evaluating an insurance broker, look for someone who has a vision for protecting your business. A great broker or insurance agent not only understands different types of insurance but also how to tailor specific insurance policies to the unique risks your business faces. They will have a deep understanding of the insurance industry, including coverage options, insurance providers, and emerging trends potentially affecting your business down the road.
What truly sets a broker apart is their ability to be proactive. A strong broker manages claims effectively, addresses issues early, and offers strategic initiatives like safety programs to minimize risks and improve outcomes.
Independent agents, who can shop for the best insurance options across multiple companies, are often an excellent choice for businesses seeking flexibility. Alternatively, captive agents—those tied to one insurance provider—may offer insights into specific products but will have limited options.
A valuable broker also supports budgeting beyond renewal periods, helping you plan your insurance spending to align with broader business goals. Ultimately, the best brokers ensure the right balance of coverage, risk management, and long-term cost efficiency – looking beyond just securing the lowest rates.
Potential Risks of a Price-Driven Broker Selection
Opting for a broker who emphasizes price over a strategically driven process can expose your business to several risks:
- Overlooked Coverage Gaps: Focusing solely on cost may mean you’re unknowingly left with insurance policies that have significant exclusions. For instance, businesses could face costly uncovered claims if exclusions are overlooked.
- Loss of Leverage in the Insurance Market: Established relationships matter in the insurance market. A broker with a strong relationship with an insurance company can negotiate better terms, whereas a broker chosen on price alone may lack this leverage.
- Rushed Renewal Process: A broker without a strategic process can lead to rushed or last-minute renewals. When it’s time to update your insurance plan, you may find yourself with limited time to make decisions—leaving you with little time to make the best decision for your company.
Accountability and Process in Broker Relationships
An experienced insurance expert is transparent, keeps clients informed, and works in alignment with their goals. This accountability builds trust and ensures both parties can openly discuss what’s working and what’s not. Strong broker relationships also mean both the broker and business can own up to any mistakes and solve them together. This open communication is essential for long-term success, particularly in an evolving insurance market.
Asking the Right Questions When Selecting an Insurance Broker
Just like a job interview, finding the right insurance broker requires asking questions to reveal their true value and expertise. Here are some effective ones to ask:
- How do you approach risk management and tailor coverage to meet specific needs?
- What’s your process for renewals and how do you keep us competitive in the market?
- What experience do you have with businesses in our industry and how do you measure success?
- How will you help our business grow and scale, particularly as we encounter new risks?
- Can you walk me through the claims process if we need to file a claim?
These questions ensure you’re working with a broker who understands your specific needs and can provide the right policy.
Red Flags to Watch for When Interviewing Brokers
Vague or Generalized Responses: If the broker provides one-size-fits-all answers, they may lack the specialization needed for your business.
Overemphasis on Low Pricing: A company fixated on price over long-term strategy is choosing to be reactive instead of proactive which may not fully identify the solutions necessary to optimize your insurance bottom line.
Lack of Transparency Around Success Metrics: If a broker can’t clearly explain how they’ll measure their success with your account, they may not be as results-oriented as you’d like.
Limited Growth Support: If the broker cannot explain how they would support your business as it scales, consider it a red flag for long-term partnership.
The Importance of a Broker of Record (BOR) Letter
The BOR letter gives a business the power to take control of its insurance decisions by selecting the broker that best aligns with its need. For businesses considering a new broker, the Broker of Record (BOR) letter is a tool officially authorizing a new broker to manage their insurance policies. It allows you to formally transition from your current broker to a new one, rather than letting an insurance company dictate the change. Executing a BOR letter can be challenging, especially if you’re ending a long-term relationship with an insurance professional. However, it allows you to start fresh with a new strategy, leading to a better process with better end-results for your business.
Partnering for Long-Term Success in Insurance
Long story short? Choosing an insurance broker is about much more than getting a quote. It’s about finding an insurance agent or brokerage with an understanding of your industry, who knows how to meet your specific needs and offers the expertise to guide you through complex insurance products— things like healthcare plans, auto insurance, and life insurance.
When a business treats broker selection as a long-term decision rather than a quick fix, they gain a consistent strategic approach that can lead to better results. At Snellings Walters Insurance Agency, we aim to provide the right insurance plan tailored to your goals, helping you navigate the market with confidence.
Pro tip: Next time your company seeks out insurance, take the time to find a broker with the right experience, track record, and understanding of the specific insurance needs for your business. With the right broker on your side, you’ll gain more than just a policy—you’ll have a partner in risk management, peace of mind, and protection.
Interested in starting the conversation? Contact us today.