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A family business must exercise prudence when it assesses the types of insurance that is right for the business. Once an insurance strategy has been agreed upon, it’s important that the right provider is selected and that a proactive, positive relationship is developed. As with any supplier, the more open the dialogue, the better and the more tailored the service.
As an insurance broker – a service provider that offers access to a range of different policies from a selection of insurance companies – I would naturally recommend businesses use the kind of services an insurance broker would provide. It’s rather like a financial advisor versus a single institution; the array of funds, fund managers and products is much greater when you use the former.
Advantages to using a Broker
I would argue that a broker has eight clear advantages over a single insurer in the following ways:
1. Having constant access to on-point advice and consultation throughout the policy cycle.
2. One contact point for every insurance need through the policy cycle.
3. Retrieving multiple quotes from multiple insurance companies based on client needs during the pre-renewal stage.
4. Being able to advise the client on the terms and conditions of each and every offer, including the small print dealing with exclusions, conditions and warranties.
5. The ability and knowledge to negotiate policy terms and conditions with the insurance providers.
6. Advising and following up on claims during the policy period.
7. Monitoring loss ratio (claims utilization) to manage the costs incurred for the year after.
8. Providing educational seminars and staff training on how to efficiently use the insurance policy so that we limit the unnecessary costs incurred.
In addition, brokers have developed robust relationships with insurance providers over many years, allowing for flexibility in premiums and terms. Going straight to an insurance company means that there is one product on the table, requiring time and resources to hunt for alternative quotes.
There are pitfalls with the broker approach, of course. Not all brokers expend the right energy to deliver the best products, and the initial selection can be a headache. But get it right, and it can be one of the most important relationships your company develops.
Assess a Broker for
Using another list of eight, businesses should assess a broker for:
1. History in the market.
2. The classes of insurance they generally deal with.
3. How many signed agreements they have with the insurance providers.
4. How strong their relationship with the insurance providers is.
5. The process of customer communication.
6. How they quote or how extensive their quoting is.
7. Speed of action.
8. Overall customer experience.
It is important to remember that there is no final stage in insurance. Like any supplier, a broker or insurance needs to be assessed regularly; as the market moves and so should companies. As a general rule it’s always better to stay with the same provider as there’s value in a relationship, but it’s always important to see what else is out there.
That’s where the broker comes in as they’re already in the market before the client has even thought about it. In all cases it’s important to consult with your broker as a team to see what the best options are.
Your relationship with your broker is vital – as long as it’s reciprocal.