Shopping Your Insurance Carrier (and Your Broker)

He’s the most personable guy in the world. He always wants to take you to play golf or to baseball, basketball, football or hockey games. But does he really work hard to get you the best coverage at the best price, or is he more interested in playing golf? Who does he work for really? You? The insurance carriers? When you were shopping brokers, they talked relationship, service, industry experience and depth of organization. None of them wanted to talk price.

While I am not discounting any of those factors, you can include price in the equation. Here is what you do: engage your incumbent and prospective brokers in a RFP-based competitive bid process. Let the incumbent know you are doing it. Here is the trick with brokers: you have each one (including the incumbent) select a limited number of carriers so that no one broker can tie up the market, and you don’t have multiple brokers soliciting the same carriers. Some insurance brokers just won’t engage in a process like this, and some incumbents will resist the process. But, you would be surprised how many will eagerly engage in a process like this in order to have a shot at new business. It will also spur new recommendations about the coverage itself. In fact, competition is a sure fire way to shake off complacency. Another recommendation is to have them show their fees in the proposals they bring at keeping your business. Some will do a percentage commission, however as the book of business becomes larger, many will go to a flat fee.

We recently initiated a process like this where our client had been with the same respected broker for thirty years. The broker’s view was that as long as the premium came in at or about what it was the year before, no need to shop or change carriers. A new broker came in with a carrier who had come into the line of business just three years earlier. They were committed to expanding their book and they were hungry. We saved the client $25,000 (a 20% reduction) in premium for the same coverage with a highly rated carrier. I am not saying price was the only factor, but at the end of the day, the money spoke more loudly than the past relationship.

So the bottom line is: don’t be afraid to shop. Otherwise, enjoy the golf!