When people think of an insurance broker, there are a lot of different things that come to mind. For some, brokers are held as admirable businesses that serve their clients first. Others, however, think that brokers are middlemen trying to complicate and impede business for their own interests. There are perhaps three big, prevalent ideas that paint brokers as alleged unnecessary middlemen. Putting these ideas under the scope, however, reveals that these ideas are myths more than anything else.
Myth #1: Brokers always cost more money than going directly to an insurance carrier.
This myth is untrue for a couple reasons, the main being how insurance carriers work with brokers.
In order for a broker to sell a certain brand of insurance, they must first be appointed by the insurance carrier. Admitted carriers appoint certain broker agencies to sell their coverage, usually based on the broker’s track record of selling insurance.
Once appointed, the insurance carrier offers a commission rate for policies the broker places with that carrier. This rate is similar when compared to the commission rates paid to their in-house sales staff for going to straight to the carrier.
From this process, the carrier benefits by having a new business channel that doesn’t require payment to in-house sales staff. Benefits for the broker include having another insurance carrier to compare client rates with, so that they may be able to switch their current clients to the new carrier for better rates and coverage.
The end result is that the client receives the personalized service of a small agency, while still enjoying the benefits of an insurance carrier’s policy. And with brokers like Presidio, there are no additional broker fees on the client’s end.
Myth #2: Going straight to an insurance carrier saves time by not dealing with a broker.
This myth would maybe be true if the client, 1) knew exactly what policy they needed, 2) didn’t care about finding the best deal, and 3) had a lot of time to fill out numerous applications. There are not, however, many clients that fit these three descriptions.
When a client goes to a broker, they fill out one application, and the information from that application is sent to multiple insurance carriers. Each carrier then responds with a quote for the one specific practice, and the broker reports back to the client with a proposal for the best coverage and rate. All of this is completely free for the client.
If a client wanted to do this for themselves, they would need to fill out a different application for each and every carrier. On top of this is understanding how to interpret the responses from the insurance carriers, and knowing what separates a good carrier from a great one. And all of that costs the client time, and sometimes, money.
Myth #3: Broker’s keep the client in the dark when communicating with an insurance carrier.
This myth delves into unethical, and possibly illegal, territory.
It is in the broker’s best interest to keep the client informed and in contact with the insurance carrier when things go awry. Just like clients, brokers can be liable when legally-required information is skewed, misrepresented, or lost. And in matters dealing with potentially litigious situations, the broker will put the client in direct communication with the insurance carrier’s legal team for the most informed and comprehensive dialogue.
For everyday questions and concerns, broker agencies almost always have an informed and available person ready to give an answer or explanation, often in the form of a phone call, a personal email, or even a face-to-face meetup.
The best asset brokers have will always be their ability to put client interests first.