Planning to involve multiple brokers in your upcoming insurance renewal? You may want to rethink that strategy. Your broker isn’t just a conduit to obtain competing quotes from insurance carriers. Your broker acts as a spokesperson for your business to insurance carriers and serves as quarterback for managing all the services that surround your insurance program. Here are some potential pitfalls that can occur when engaging multiple brokers at one time:
Multiple submissions to the same carrier
Without a tightly controlled process to determine which broker will approach which insurance carrier on your behalf, carriers could end up receiving a submission for your business from multiple brokers. Typically, the first broker to submit reserves the carrier, restricting access for others. To change the broker working with the carrier, you must sign a Broker of Record (BOR) letter.
Individual underwriters can receive hundreds of submissions each month and prioritize those they feel they have the best opportunity of writing. They rely on the broker to let them know what’s critical to include in the program, the targeted pricing, and the likelihood of successfully writing the account. When they receive the same submission from multiple sources, they know that with another broker involved, there’s likely a broad marketing effort taking place – and even if they meet the expectations the broker has set for the quote, they may not be working with the right partner that will end up with the client.
Right insurance carrier, wrong submission
If you don’t clearly assign insurance carriers to each broker, the first submission received by an insurer will be the one that the insurance carrier is required to underwrite. Not all submissions are created equal and sometimes, the broker who submits first may not have invested adequate time and effort into their submission.
For an underwriter, there’s no comparison between a barebones submission of ACORD applications and loss runs, versus a comprehensive submission with detailed information about your risk management program or explanation of prior loss results and corrective actions. Even if markets are assigned up front, the most ideal insurance carrier might struggle to put together a competitive program if the broker involved has failed to provide the information needed to justify their pricing to management or gain a comfort level with the coverages and limits they’d be extending on your behalf.
Analyzing the options
When multiple brokers are presenting quotes, you risk losing the benefit of an independent advisor who can help you comprehensively analyze the insurance carrier options that are on the table. With each broker pushing their best option, how can you independently evaluate in detail the programs beyond the price?
Perhaps one insurance carrier may offer a lower price but have a problematic exclusion or poor claims handling track record. Your broker should be your trusted expert, capable of evaluating and comparing coverage in detail and providing feedback based on an insurance carrier’s track record with their other clients.
Servicing once the program is in place
Even if a broker brings you the best insurance program in terms of both coverage and price, they may not be the best provider of service after the program is bound. While your insurance carrier provides the coverage, your broker is responsible for all of your day-to-day needs such as providing certificates of insurance, reviewing contracts, advising of appropriate class codes, pushing for coverage in claims scenario, resolving billing issues, disputing audits, etc. Even the best insurance program can be a problem if your broker can’t effectively service it.
In most cases, we recommend selecting one broker to handle your insurance renewal. When evaluating which broker is best for you, consider the following qualities:
- Expertise in your industry and access to the insurance carriers that specialize in insuring it.
- Submission quality and standards and how the broker builds a compelling case for your business.
- Capabilities in day-to-day services, safety support, and claims advocacy.
By using a single insurance broker, you can streamline the process, enhance communication, and ultimately secure the best insurance solution for your needs. For more information on how using a broker can be beneficial for your next insurance renewal, please contact a Marsh McLennan Agency (MMA) advisor.
