Selecting an insurance broker is an important decision for a company. Usually, smaller companies just use their insurance agents. However, most large companies have brokers rather than agents because they have many coverage lines that are obtained from many different insurance companies.
The insurance broker acts in a fiduciary role for your company. Your company trusts the broker with protecting your financial assets through selecting and obtaining your insurance. While the broker acts on your behalf, their actions are subject to your control and consent.
This fiduciary responsibility of the broker goes beyond just finding the best price for your company’s insurance. They also have the fiduciary obligation to recommend the best financial protection of your assets for both the short and long term. The insurance broker’s duties and obligations are to put your company’s best interests first. A good broker will take the initiative to act to provide benefits to your company without the company having requested it.
To make sure your company selects the best insurance broker for its needs, it is important to interview any prospective brokers before finally selecting a broker. You need to make sure that the broker you choose is the one that best suits your company’s needs, which isn’t necessarily the biggest firm or the one with the most advertising.
Key Questions to Ask
First, you want to know how the insurance broker will make your program more cost effective. Some brokers have cost containment experts to provide suggestions and support. Ask the broker how they will:
- Review and analyze your existing coverage?
- Structure your company’s program?
- Market your company to insurance carriers?
- Enhance your company’s insurance coverage and reduce costs to make your program more cost effective?
- Do they have incentive-based options for their fees?
Second, you will want to know what type of customer service your company will receive from the broker. As the broker:
- Who is the team that will service your account? Are they willing to meet with your team to brainstorm and implement ideas?
- How easy is it to reach their team by phone?
- Are they easily accessible via email?
- Is the broker tied into the internet? Is their website user friendly? Do they have lots of educational resources available for clients?
- What experience they have in your industry? Do they have industry groups for your industry?
- Do they have RIMS (Risk Management Information Systems) capabilities?
- If your company has operations outside the United States do they have experience in those parts of the world?
- What is their timeline for all the activities they propose?
- How will they ease the transition from your present to any new carriers? Do they have experience with your existing carriers?
Next, you will want to know what the broker’s capabilities are in the following areas:
- Claim Advocacy: Do they have claim specialists to help in difficult situations?
- Claim Reviews: What are their procedures for claim closure and best practice reviews?
- Loss Control: Do they have specialists to help develop strategic plans in areas such as:
o Repetitive motion injuries
o Loss trend analysis
o Slip and fall prevention
o Air quality programs,
o Lock-out/ tag-out expertise,
o Safety consulting on OSHA requirements and safety cultures
- Post-Loss Cost Containment: What systems and procedures do they have to reduce workers’ comp costs after an employee is injured?
Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: firstname.lastname@example.org.
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