Insurance is the safety net that protects your organisation following an unexpected and adverse event. From office break-ins to arson and personal injury to shareholder disputes, insurance policies often make the difference between normal life and financial ruin. It can, however, be extremely complicated and difficult to properly arrange commercial insurance policies, especially if your business is large and has complex trading arrangements or innovative products.
The conduit to complex insurance solutions is a commercial insurance broker. But given the importance of and difficulties with arranging commercial insurance policies how do you ensure that you choose the right commercial insurance broker to advise and represent you? In this article we provide you with some help and guidance as to what you should look for in a commercial insurance broker to ensure that you are properly protected.
Are they properly licenced?
In the UK, insurance brokers must be authorised to trade by the Financial Conduct Authority (FCA). They are then regulated on an ongoing basis by the FCA to ensure they adhere to proper financial practices within their business. You should check that any broker with whom you are considering placing insurance policies is properly authorised and regulated by performing a free check on them via the Financial Services Register.
Unfortunately, many businesses have been victims of the “ghost broking” fraud. This is where unregulated fraudsters, posing as legitimate brokers, disingenuously provide businesses with fake, invalid, or forged insurance policies that have zero legitimacy.
Do you have a cultural match?
From one-man bands to multinational corporations, insurance brokers come in all shapes and sizes. However bigger isn’t always better and by ensuring that you have a cultural fit with your broker is much more important than the size of their head office! Does their corporate culture mean they focus on supporting their staff, customers and the world at large or are they simple focused on lining their shareholders pockets?
What do you expect and does that match with your brokers business model?
To do this you need to determine exactly what is important to you, for example are you simply buying insurance to meet your contractual obligations and thus the lowest possible price is key? Or do you want to ensure that you are properly insured for every likely eventuality whilst making sure you’re paying a fair and affordable premium?
Ask the broker about their approach to customers. Do they work on a whole of market basis and provide their customers with a transparent review of their findings supported by their advice and recommendations or do they just provide a quote from a single insurer which they say is the cheapest?
Does the broker invest time in the relationships with their customers? Do they appoint dedicated individuals to understand your business or are you just a number within a call centre? Does the broker hold your hand in the event of a claim or just hand you off to the insurer?
Which carriers do they work with, and what coverage do they offer?
A large part of a broker’s role is to correctly match a customer’s risk transfer preferences with an insurer who is willing to accept that transfer of risk. It is therefore important to understand which insurance carriers the broker works with and whether they can provide you with the solutions you need. An insurers focus will often be on the level of risk presented by the underlying client and ensuring that they feel there is price adequacy to support this risk. If the insurance market considers your business to be high risk, then choosing a broker with access to insurers with a matching risk appetite is essential.
You must also consider the insurance carriers ultimate ability to pay claims. After all not all insurers are built equal and whilst the broad intention of the insurer will no doubt be to meet their liabilities as they fall due, the size and structure of their balance sheet could have an impact on their ability to do so in the event of catastrophic losses. Generally, insurers of standing subject themselves to a credit assessment by well respected, independent rating agencies. The likes of Standard and Poor’s, AM Best and Fitch are all consider to be expert in the assessment of an insurers credit worthiness. It is for this reason that you ought to seek out brokers that work with A-rated carriers, as this will increase the likelihood of your claims being paid if the worst should happen.
Can your broker support the growth of your business?
You also want to consider your long-term business goals when choosing your broker. As your business grows, you will almost certainly need to adjust your insurance arrangements. This could mean purchasing bigger limits, expanding policies to incorporate newly formed international operations or creating captives and other alternative risk management structures to make better use of the monies allocated by your organisation to your risk management strategy. Not all brokers are able to deliver a broad suite of solutions and so it’s important to properly match the brokers capability with your business plan.
Sustain Insurance Brokers are fully authorised and regulated by the FCA and provide a fully advised, customer centric, commercial insurance broking service. We work with well established, complex businesses looking to create and manage best value insurance programs whilst creating a lasting and positive impact on the world through our focus on sustainability.
Get in touch today to discuss your insurance needs and to see how we can help!
