Managing your insurance is a task that is overly complicated. The process is not transparent and comparing quotes is difficult at best. By understanding the quoting process better, you can make the best possible decision regarding a budget item that could have a material impact on the bottom line. In today’s commercial insurance market place the rates are in flux and the coverage options are increasing. To succeed in this market, it’s important to understand how agents will position your business with an insurance company at the start of the process.
The first step is the agent deciding to market your account directly to a carrier or through a wholesale broker. Either way they will let the underwriter know if this is a renewal or new business. They should then let them know how competitive the process will be. The underwriters understanding of how competitive it will be to win the account is of the utmost importance. This is where the most important rule in commercial insurance marketing comes into play. An insurer will only provide a quote for your property or business to only one broker, not multiple brokers. They will only deal with the agent that got there first. This takes the control out of the hands of the customer and leaves it up to the system that rewards the broker that “reserves the market” first rather than the agent that can deliver the best results.
Why is this you ask? There is actually a fairly simple answer. Ask any underwriter and you will hear the same thing. They get hundreds if not more submissions a day. They do not want to waste time on the ones that they can’t write and definitely do not want to practice quoting. Underwriters get paid based on how much business they write, and like most people they do not waste time on poor quality submissions or ones they don’t think they have a good shot at writing. If an underwriter sees the same account being shopped out by multiple insurance agents, they feel the chances of winning this account are slim. As a result, they have little motivation to give that account their best effort. In this case the customer is the one who is hurt since that underwriter may have been the best market for the account.
This process underscores the importance of picking the right agent and not quoting out your insurance unnecessarily. Choose your insurance agent as you choose your accounting firm, attorney or investment advisor. If you are happy with your current agent do not go through the process. However, if you are having doubts about the limits, pricing or any other aspect of your insurance program there is most likely some other underlying issue with the current agent. This may be a sign that it is time to start looking for a new agent and not a new carrier. Picking the right agent is critically important to the entire process. It is basically an interview. Experience and size of the agency are both important but that alone shouldn’t be the deciding factor on choosing and agent. You want to make sure that they have a strategy when it is time to market your account. Do they have the markets for the account? Are you a good fit for what they do and are they a good fit for you. Do you feel like they are trustworthy? When they have to make a decision relating to your coverage are they going to decide in your favor or theirs? These are all things that you should take into consideration when picking the agent to represent you.
One thing to keep in mind is insurance is not a commodity, unlike furniture. When you have two agents competing on an account, you can be hurting yourself. You are better off having one qualified agent negotiating amongst several markets, rather than several agents blocking each other at limited markets.
Having two agents competing on your account may seem like a good idea, and if you’re shopping for furniture it may be. However, in the current insurance marketplace it is a waste of everyone’s time, and you may actually lose out on good agents who refuse to participate in a competitive bid situation. Getting the right agent is the key to getting the right program for your insurance needs.