Knowledge is power when you're avoiding pitfalls in commercial insurance, corporate benefits and wealth management. We'll show you the most common mistakes so that you can avoid costly difficulties down the line — keeping you and your company on solid ground.
Mistake #1: Choosing Your Broker for the Wrong Reasons
Although having a great client-broker relationship is essential, simply working with someone you like doesn’t guarantee that the advisor, or firm, is the best choice for your business. Although the broker might be a great neighbor, golf buddy or all-around human being, that’s not a solid business reason to make a sound buying decision
When buying commercial insurance, it’s critical to find a firm that “fits” your company’s size, needs and demographics. If you’re a broker’s biggest client, that firm may not have the resources to effectively manage the complexities of your risk. If you’re a small company with a huge brokerage firm, you may not get the level of service you need. Your account team will most likely be comprised of newbies — people who will move on to a larger client after they’ve been trained on you.
Your best bet? Choose a broker with a focus on clients that “look” like you, in terms of size, revenue and market position. Ask what percentage of clients are in your demographic, get a list of those clients and talk to them about their experience with the broker. Compare the company’s internal resources with other firms that insure like-sized organizations. You’ll either learn that you have the right broker in place, or you’ll be motivated to find one that offers more value.
Mistake #2: Treating Insurance as a One-and-Done Transaction
Commercial property and casualty insurance is a unique animal, requiring a high degree of interaction between broker and client. To insure your business properly, the broker has to learn everything about the company: what it does, the products and services it offers, and its plans for growth.
While most company leaders will spend time with the broker early on, once the policy is written, many just “set it and forget it.” And that’s a problem.
As organizations grow and change, the last thing the C-suite typically wants to think about is insurance. However, at least once a year, it’s imperative that you work with your broker to identify what’s changed and how those changes impact risk.
Everything from adding products or channels to opening new locations or hiring more people will affect coverage. Not keeping your broker in the loop to adjust your insurance portfolio as your business evolves could have devastating consequences.
The best approach? Don’t just think about insurance when you have a claim or see a rate increase. Every year, set time aside to do a deep dive with your broker, months before renewal. Not only will this assure that your business has the coverage it actually needs, but, by starting the process early, your broker will have time to negotiate your rates with the carriers — so you can get that coverage at the lowest possible cost.
Mistake #3: Buying What’s Required Instead of What’s Needed
Smaller businesses often buy insurance out of necessity; they hire an employee, lease office or retail space, or bring on a new client that requires liability insurance. Instead of looking at risk, they purchase the minimum coverage they need to meet legal or client obligations.
Although these businesses might think they’re saving money, they’re actually gambling with their companies. Startups and small businesses still need the right combination of coverage — or one wrongful termination suit, liability claim or cyberattack could take a thriving organization down.
An independent broker who works with small businesses and startups can identify the coverage needed and negotiate the best rates on your behalf.
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